Consumer Confidence Index Improves Moderately in December

December 27, 2007

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The Conference Board Consumer Confidence Index, which had been declining since the summer, posted a slight increase in December and now stands at 88.6 (1985=100), up from 87.8 in November.

The Present Situation Index, however, decreased to 108.3 from 115.7 in November, while the Expectations Index rose to 75.5 from 69.1, the Conference Board reported.

tcb-cci-december-2007.jpg“This month’s slight gain in confidence was due solely to an increase in the Expectations Index. Consumers’ short-term outlook regarding business conditions, employment, inflation and stock prices improved marginally. However, while consumers are less negative about the near-term future, they remain far from optimistic,” said Lynn Franco, director of The Conference Board Consumer Research Center.

“Furthermore, persistent declines in the Present Situation Index indicate the economy is still losing momentum. In fact, in assessing the current job market, pessimists now outnumber optimists. Regarding business conditions, the gap between the two is almost nonexistent.”

Among the December data reported:

  • Consumers’ appraisal of present-day conditions continues to paint a dismal picture:
    • Those claiming conditions are “good” decreased to 20.3% from 22.5%.
    • Those saying conditions are “bad” increased to 20.0% from 18.9%.
  • Consumers’ assessment of the job market was also less positive:
    • Those saying jobs are “hard to get” rose to 23.5% from 21.4%.
    • Those claiming jobs are “plentiful” declined to 22.7% from 23.3% in November.
  • Consumers’ short-term expectations, while reversing a four-month slide, remain at levels that bear watching:
    • Those expecting business conditions to worsen in the next six months decreased to 14.1% from 16.6%.
    • Those anticipating business conditions to improve increased to 13.8% from 12.4%.
  • The outlook for the labor market was also less pessimistic:
    • The percentage of consumers expecting more jobs in the months ahead inched up to 11.2% from 10.6%.
    • Those anticipating fewer jobs edged down to 19.9% from 22.8%.
    • The proportion of consumers expecting their incomes to increase in the months ahead decreased to 19.0% from 19.4%.

About the data: The Consumer Confidence Survey is based on a representative sample of 5,000 US households. The monthly survey is conducted for The Conference Board by TNS. The cutoff date for December’s preliminary results was December 18.

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