The Conference Board Consumer Confidence Index increased 1.9% during January (12.4% y/y) to 125.4 following a 4.3% December decline to 123.1, revised from 122.1. A level of 123.2 had been expected in the Action Economics Forecast Survey. The indexes are based on 1985=100. During the past thirty years, there has been a 70% correlation between the level of consumer confidence and the y/y change in real PCE.

The rise in overall confidence reflected a 4.7% increase (6.2% y/y) in the expectations index to 105.5 after December's 9.2% decline. The present situation index reading eased 0.8% (+19.5% y/y) to 155.3 following a 1.0% gain.

The percentage of respondents indicating conditions are "good" fell to 34.9% this month from December's 35.8%. The percentage saying business conditions are "bad" edged up to 12.7% from 11.3%. Job market readings remained firm. Jobs were viewed as "plentiful" by an expansion high, 37.6% of respondents. Jobs were viewed as "hard to get" by 16.4%, up slightly from December's expansion low of 16.0%. The net jobs assessment improved to +21.2, the most favorable since July 2001. The differential is 97% inversely related to the unemployment rate.

The increase in the overall expectations reading reflected an increase in the percentage expecting business conditions to improve over the next six months to 22.0% from 21.6% in December. Those expecting more jobs was fairly steady at 19.0%, though that was down from the 23.8% expansion high reached during March of last year. Incomes are expected to improve by a lessened 20.4% of respondents, down from the 22.7% expansion high reached in December.

Expectations for the inflation rate in twelve months fell to 4.6% from 4.8% in December, while the percentage expecting higher interest rates over the next twelve months increased to 67.8%, a six-month high. Those looking to buy a home in the next six months plunged to 6.0%, following a significant strengthening through December.

By age group, confidence increased the most among individuals over age 55, up 18.7% y/y. Confidence among those aged 35-54 gained 13.5% y/y, while younger respondents, under age 35, saw confidence decline 1.5% 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.

A Primer on Price Level Targeting in the U.S. from James Bullard, President & CEO of the Federal Reserve Bank of St. Louis is available here.