U.S. Consumer Confidence Drops Much More Than Expected In December

by Ike Obudulu Last updated on March 26th, 2019,

U.S. Consumer confidence tumbled  much more than expected in the month of December, according to a report released by the Conference Board on Thursday.

The Conference Board said its consumer confidence index slumped to 128.1 in December after dipping to a revised 136.4 in November.

Economists had expected the consumer confidence index to edge down to 134.0 from the 135.7 originally reported for the previous month.

The bigger than expected decrease by the headline index reflected a continued deterioration in consumer expectations, with the expectations index plunging to 99.1 in December after falling to 112.3 in November.

“While consumers are ending 2018 on a strong note, back-to-back declines in Expectations are reflective of an increasing concern that the pace of economic growth will begin moderating in the first half of 2019,” said Lynn Franco, Senior Director of Economic Indicators at the Conference Board.

The drop by the expectations index came as the percentage of consumers expecting business conditions to improve over the next six months fell to 18.3 percent from 21.9 percent and those expecting conditions will worsen rose to 9.7 percent from 8.3 percent.

Consumers’ outlook for the labor market was also less favorable, with the percentage expecting more jobs in the months ahead sliding to 16.6 percent from 22.7 percent and those anticipating fewer jobs climbing to 14.4 percent from 11.2 percent.

The report said consumers’ assessment of current conditions also declined slightly, dragging the present situation index down to 171.6 in December from 172.7 in November.

The percentage of consumers saying business conditions are “good” decreased to 37.2 percent from 42.0 percent, while those claiming conditions are “bad” inched up to 11.3 percent from 10.7 percent.

Consumers’ assessment of the labor market was mixed, as those claiming jobs are “plentiful” slipped to 46.2 percent from 46.8 percent but those claiming jobs are “hard to get” also edged down to 11.6 percent from 12.6 percent.

Last Friday, revised data released by the University of Michigan unexpectedly showed an improvement in U.S. consumer sentiment in the month of December.

The report said the consumer sentiment index for December was upwardly revised to 98.3 from a preliminary reading of 97.5. Economists had expected the index to be unrevised.

With the unexpected upward revision, the reading on consumer sentiment in December is above the final November reading of 97.5.

Why Markets Care About Conference Board Consumer Confidence Index (CCI)

The Conference Board (CB) publishes the Consumer Confidence Index (CCI), at 10 a.m. ET on the last Tuesday of every month.

It measures Level of a composite index based on surveyed household.

The usual effect is that  ‘Actual’ greater than ‘Forecast’ is good for the dollar and vice versa.

The Consumer Confidence Index is derived   a survey of about 5,000 households which asks respondents to rate the relative level of current and future economic conditions including labor availability, business conditions, and overall economic situation. The Consumer Confidence Survey reflects prevailing business conditions and likely developments for the months ahead. This monthly report details consumer attitudes and buying intentions, with data available by age, income, and region.

The Conference Board Consumer Confidence Index (CCI) is a barometer of the health of the U.S. economy from the perspective of the consumer. The index is based on consumers’ perceptions of current business and employment conditions, as well as their expectations for six months hence regarding business conditions, employment, and income. The Consumer Confidence Index and its related series are among the earliest sets of economic indicators available each month and are closely watched as leading indicators for the U.S. economy.

Financial confidence is a leading indicator of consumer spending, which accounts for a majority of overall economic activity.

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