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Economy in Brief

U.S. Consumer Confidence Shows Partial Recovery
by Carol Stone  December 29, 2015

The Conference Board's Consumer Confidence Index rose 4.2% in December to 96.5 (1985=100) from November's revised 92.6 and up 3.7% from a year ago, but still lower than most other months this year. The December figure compared with a consensus expectation for 93.6, according to the Action Economics Forecast Survey. Readings for both the present situation and expectations shared in the December rise, with the present situation up 4.0% to 115.3 (+15.4% y/y), and expectations up 4.4% to 83.9 (-5.2% y/y).

The share of consumers believing business conditions are "good" rose to 27.3% in December from November's 25.0%, although the share believing conditions are "bad" also rose, from 16.9% to 19.8%. Thus, those thinking conditions are "normal" sank to 52.9%, the lowest since October 2012.

However, the assessment of the jobs market improved, as the number believing that jobs are "plentiful" rose to 24.1%, the second highest reading this year. September was 24.8%, and those two months mark the largest shares since late 2007, before the recession. The share of consumers thinking jobs are "hard to get" eased to 24.7% in December, close to the annual average for 2015 of 25.3%, compared to 30.6% in 2014.

The gain in expectations came about mainly because of a drop in the share of consumers looking for employment to fall; this share was 16.6% in December, down from 18.6% in November. Those expecting job opportunities to increase rose to 12.9% from 12.0%, making a positive move in the expected jobs "gap" from November's -6.5% to -3.7% in December. This is not absolutely favorable by any means, but clearly not as poor as November's more pessimistic jobs outlook.

Prospects for general business conditions deteriorated modestly, with those looking for improvement easing slightly and those looking conditions to deteriorate rose slightly, so that the "gap" in those readings decreased to +4.2% from +5.1%. People still believe that inflation is running close to 5%, with the December projection at 4.8%.

Buying plans included another slight decline in the percentage of respondents planning to buy a house, though at 5.8%, this share is a bit higher than the 2015 average 5.5%. Plans to buy major appliances increased to 51.5%, the second largest share this year after July's 52.1%. After a gain in November, plans to buy a car eased, to 10.5% from November's 12.7%; the average for the entire year is 11.9%.

The rebound in December's overall confidence reading was nearly all concentrated in younger consumers, age under 35. Among these people, confidence rose 18.8% to 126.0 (26.8% y/y), their highest reading since January. Those aged 35 to 54 had basically unchanged confidence in December, up a mere 0.8% to 99.3 (-3.2% y/y), and confidence edged lower among older consumers, down 1.0% to 77.7 and -7.2% y/y.

The Consumer Confidence data is available in Haver's CBDB database. The total indexes appear in USECON, and the market expectations are in AS1REPNA.

Conference Board (SA, 1985=100) Dec Nov Oct Y/Y % 2015 2014 2013
Consumer Confidence Index 96.5 92.6 99.1 3.7 98.0 86.9 73.2
  Present Situation 115.3 110.9 114.6 15.4 111.6 87.4 67.6
  Expectations 83.9 80.4 88.7 -5.2 88.9 86.6 77.0
Consumer Confidence By Age Group
  Under 35 Years 126.0 106.1 115.0 26.8 116.5 106.6 93.1
  Aged 35-54 Years 99.3 98.5 110.1 -3.2 103.8 92.4 76.8
  Over 55 Years 77.7 78.5 82.3 -7.2 84.0 73.8 61.2
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