Consumer confidence backs off 15-year high

Consumer confidence slipped slightly in January after reaching a 15-year high in December, though outlook for the present overrode the outlook for the future.



The index now stands at 111.8 (less than an expected 113), down from 113.3 the previous month.



“Consumer confidence decreased in January, after reaching a 15-year high in December (Aug. 2001, 114.0),” said Lynn Franco, director of Economic Indicators at The Conference Board. “The decline in confidence was driven solely by a less optimistic outlook for business conditions, jobs, and especially consumers’ income prospects. Consumers’ assessment of current conditions, on the other hand, improved in January. Despite the retreat in confidence, consumers remain confident that the economy will continue to expand in the coming months.”



The Present Situation Index actually increased from 123.5 to 129.7, with those saying business conditions are “good” increasing slightly from 28.6% to 29.3%, while those saying business conditions are “bad” decreasing from 17.8% to 16.1%. Consumers’ assessment of the labor market was also more positive than last month. The percentage of consumers stating jobs are “plentiful” rose from 26.0% to 27.4%, while those claiming jobs are “hard to get” decreased from 22.7% to 21.5%.



Meanwhile, the Expectations Index decreased from 106.4 last month to 99.8. The percentage of consumers expecting business conditions to improve over the next six months decreased from 24.7% to 23.1%, while those expecting business conditions to worsen increased from 8.9% to 10.7%.



As for the labor market, the proportion expecting more jobs in the months ahead decreased from 21.7% to 19.8%, while those anticipating fewer jobs was virtually unchanged at 14.0%. The percentage of consumers expecting their incomes to increase declined from 21.5% to 18.0%, while the proportion expecting a decrease rose from 8.6% to 9.6%.