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Economy in Brief

U.S. Consumer Confidence Continues Lower
by Tom Moeller  January 29, 2013

The Conference Board's Consumer Confidence Index for January dropped sharply to 58.6 from 66.7 in December, revised from 65.1. The latest figure was the lowest since November 2011. Consensus expectations had been for a little-changed 65.0 for this month. During the last ten years, there has been a 47% correlation between the level of confidence and the three-month change in real PCE.

The expectations component dropped 12.6% to 57.3 which was its lowest level since October 2011. A diminished 15.4% thought business conditions would be better in six months. Also, much-reduced 14.3% thought there would be more jobs while a lessened 13.6% expected higher income. Consumers' reading of the present situation fell to 57.3, down from its December high. Confidence in the labor market fell sharply as a lessened 8.6% reported that jobs were plentiful. An increased 37.7% thought that jobs were hard to get. A lessened 16.7% asserted that business conditions were good.

Expectations for inflation in the next twelve months ticked up to 5.7% and remained higher than the June low of  5.3%. The percentage of people looking for higher stock prices rose to 31.2% this month, while the percent who are bearish fell moderately. The percentage of respondents planning to buy a home within six months fell to 0.9%, but the percent planning to buy a major appliance rose slightly.

Consumer confidence varied greatly by age group. Those under 35 years old tended to be the most confident, but that confidence is diminishing. Middle aged individuals also were somewhat less confident but those over 55 years were the least confident about the economy.

 

Conference Board (SA, 1985=100) Jan Dec Nov Y/Y % 2012 2011 2010
Consumer Confidence Index 58.6 66.7 71.5 -4.7 67.1 58.1 54.5
  Present Situation 57.3 64.6 57.4 47.7 49.8 36.1 25.7
  Expectations 59.5 68.1 80.9 -22.4 78.6 72.8 73.7
Consumer Confidence By Age Group
  Under 35 Years 76.6 94.8 96.5 0.4 86.5 77.3 70.4
  Aged 35-54 Years 58.7 65.9 72.5 -3.9 68.5 59.8 55.1
  Over 55 Years 50.8 53.6 60.1 -5.9 56.6 47.3 47.4
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