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Economy in Brief

U.S. Consumer Confidence Turns Down
by Carol Stone  December 27, 2012

The Conference Board's Consumer Confidence Index for December fell 6.4 points to 65.1 (1985=100) from 71.5 in November. That figure was itself revised down 2.2 points from 73.7 reported a month ago. Consensus expectations had called for a modest decrease to 71.0 for December.

The "Present Situation" components actually moved favorably, to 62.8 from 57.4 in November; the December value was the highest since August 2008. Participants' assessment of general business conditions improved with an increase in the number of people seeing them as "good" and a sizable decrease in the number describing business as "bad". Employment conditions improved on balance; even though the number finding jobs plentiful went down a bit, those describing jobs as "hard to get" fell 1.8%, a third successive decrease.

So the drop in the overall confidence measure is due to lower "Expectations". Indeed, that subindex fell 14.4 points to 66.5, the lowest since November 2011 and down 17.5 points in just the last two months. There were adverse movements in the assessments of general business expectations, employment and income, in which the proportions of respondents looking for better business, more jobs and higher income all fell, while the proportions anticipating slower business, fewer jobs and lower incomes all rose, these latter by several points each.

Expectations for inflation in the next 12 months were unchanged at 5.6%. The move in the overall expectations index was reflected in expectations for the stock market, with a 2.6% decrease in the share of people looking for higher prices in the next 12 months and a 7.4% increase in the share expecting lower stock prices. The percentage of respondents planning to buy a home within six months fell again, and so did the proportion planning to buy major appliances. However, the share expecting to buy an automobile edged up modestly, erasing part of its November loss.

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 expectations figure is from Actions Economics, as tabulated in the AS1REPNA database.

Conference Board (SA, 1985=100)
Dec Nov Oct Y/Y % 2012 2011 2010
Consumer Confidence Index 65.1 71.5 73.1 0.5 66.9 58.1 54.5
  Present Situation 62.8 57.4 56.7 35.1 49.6 36.2 25.7
  Expectations 66.5 80.9 84.0 -13.6 78.4 72.8 73.7
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