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Economy in Brief

U.S. Consumer Confidence Declines Modestly
by Tom Moeller January 31, 2012

The Conference Board's Index of Consumer Confidence fell during January by 3.7 points to 61.1 (seasonally adjusted, 1985=100) after notable increases during the prior two months. The latest decline disappointed Consensus estimates for a further increase to 68.0. During the last ten years there was been a 48% correlation between the level of confidence and the three-month change in real PCE.

The present conditions components led this month's decline with an 8.1 point decline which fully reversed the December gain. The readings for business conditions and job availability deteriorated m/m. "Jobs hard to get" increased moderately to 43.5 although that remained down significantly from the September high of 49.4.

Consumer expectations also declined moderately. The January figure, following an upwardly revised December, was in the range that had prevailed from late-2009 through early-2011. Expectations for income and employment deteriorated while the outlook for business conditions was roughly unchanged m/m and still well-above its October low.

Expectations for inflation in the next twelve months ticked up to 5.5% from 5.3% in December. This compares to 4.9% in July, 2010. The percentage of people looking for stock prices to rise increased to 31.0% this month, the most optimistic since May, while the percent who are bearish fell in January to 34.3%, the least negative since May.

Headline figures on consumer confidence are carried in Haver's USECON database. The Conference Board's detailed data are found in Haver's CBDB database, and the consensus expectation figure is from Actions Economics, as tabulated in the AS1REPNA database.

Conference Board (SA, 1985=100) Jan Dec Nov Y/Y % 2011 2010 2009
Consumer Confidence Index 61.1 64.8 55.2 -5.7 58.1 54.5 45.2
Present Situation 38.4 46.5 38.3 23.5 36.2 25.7 24.0
Expectations 76.2 77.0 66.4 -12.7 72.7 73.7 59.3
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