This article goes over the recent numbers of the Conference Board’s consumer confidence index, which, "gaug[es] attitudes about the current and future strength of the economy." In December, the number was 109, and was expected to remain as such, but by January it decreased to 107.1.
Despite this decrease, the Present Situation Index grew from 147.4 in December to 150.9 in January. This indicates consumers may be growing more confident. However, while consumers are more confident about the short run, there is still concern over long run economic conditions.
The expectation index decreased from 83.4 in December to 77.8 in January. This is particularly concerning since an expectation index below 80 usually indicates an expected recession in the next year.
Consumers seem to be more concerned about some aspects of the economy over others. Ataman Ozyildirim, the Conference Board’s senior director of economics, states, "Consumers were less upbeat about the short-term outlook for jobs... They also expect business conditions to worsen in the near term." However, "Despite that, consumers expect their incomes to remain relatively stable in the months ahead.” Consumers' plans for buying automobiles and appliances remain unchanged, but consumers are likely to buy less houses.
The Federal Reserve sees their rate hikes as being successful at cooling down an "overheated economy" as evidenced by the "softer data on housing prices, wages, and consumer confidence at the turn of the year"
It is interesting that consumers seem content with the state of the economy in the short run but still hold growing concerns for the long run. I don't think it is surpising that the expectation index indicates an expected recession as that's what consumers have been hearing for months.
ReplyDeleteWhy do you think consumers' feel more confident that their savings will remain stable in the months ahead? There has certainly been more talk about another recession, but do you think there's another reason that confidence has increased? Perhaps Biden's marketing tactics, or the fact that unemployment has been falling?
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