Jan. Consumer Confidence Rises Thanks to Future Optimism

By Kerry Smith

Americans think current conditions aren’t great – but they’ll get better. The overall index rose more than 2 points but a future expectations index rose 5.5 points. It also had positive housing news, suggesting “the pace of home sales should remain robust in early 2021.”

BOSTON – The Conference Board Consumer Confidence Index for January found an uptick in attitudes after it decreased in December.

The Index now stands at 89.3, up from 87.1 in December. However, the Present Situation Index – based on consumers’ assessment of current business and labor market conditions – decreased from 87.2 to 84.4.

The Expectations Index – based on consumers’ short-term future outlook for income, business and labor market conditions – increased from 87.0 in December to 92.5 this month.

“Consumers’ appraisal of present-day conditions weakened further in January, with COVID-19 still the major suppressor,” says Lynn Franco, senior director of economic indicators at The Conference Board. “Consumers’ expectations for the economy and jobs, however, advanced further, suggesting that consumers foresee conditions improving in the not-too-distant future.”

Franco says the index also suggests strength in the housing market: “The percent of consumers who said they intend to purchase a home in the next six months improved, suggesting that the pace of home sales should remain robust in early 2021.”

Current conditions: The percentage of consumers claiming business conditions are “good” increased from 15.4% to 15.8%, but those claiming business conditions are “bad” also increased, from 39.7% to 42.8%.

Assessment of the labor market was also less favorable. The percentage of consumers saying jobs are “plentiful” declined from 21.0% to 20.6%, while those claiming jobs are “hard to get” rose from 22.9% to 23.8%.

Future expectations: While current conditions are challenging, consumers are slowly gaining more hope for the future.

The percentage of consumers expecting business conditions to improve over the next six months increased from 29.5% to 33.7%, while those expecting business conditions to worsen decreased from 22.0% to 18.1%.

Outlooks regarding the job market also improved. The proportion expecting more jobs in the months ahead increased from 28.0% to 31.3%, while those anticipating fewer jobs decreased from 22.2% to 21.4%.

Regarding short-term income prospects, the percentage of consumers expecting an increase declined from 15.7% to 14.4% – but the proportion expecting a decrease also declined from 14.6% to 14.2%.

Nielsen conducts the monthly Consumer Confidence Survey for The Conference Board. The cutoff date for the preliminary results was January 14.

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