Consumer Confidence Bounces Back in December
Shoppers’ interest may shift to services over big-ticket items in 2023, said economist Lynn Franco.
However, a shift in consumer behavior may be on the horizon, with some predicting shoppers will choose services over big-ticket items in 2023.
The Conference Board’s consumer confidence index climbed to 108.3 in December from 101.4 in November.
“Consumer confidence bounced back in December, reversing consecutive declines in October and November to reach its highest level since April 2022,” said Lynn Franco, senior director of economic indicators at The Conference Board.
The Present Situation Index, which measures consumers’ outlook on current business and labor market conditions, rose to 147.2 in December from 138.3 in November.
The percentage of consumers who said current business conditions are “good” was up to 19 percent from 18 percent last month, while those who said conditions were “bad” decreased, down to 20 percent, compared with 24 percent in November.
Consumers also had a more positive view of the labor market, with 48 percent of respondents saying jobs are “plentiful,” up from 45 percent last month.
The percentage of respondents who felt jobs were “hard to get” was down to 12 percent from 14 percent last month.
The Conference Board’s Expectations Index, which measures consumers’ short-term outlook for income, business, and labor market conditions, rose to 82.4 from 76.7.
Notably, the index is still hovering around 80, which is a level associated with recession, said the Conference Board.
Respondents took a slightly more optimistic view of the short-term business outlook, with 20.4 percent expecting business conditions to improve, up from 19.8 percent in November.
Fewer expected conditions to worsen, down to 20 percent from 21 percent last month.
Consumers’ view of the short-term labor market was also positive, with more respondents expecting more jobs to be available, up to 20 percent from 19 percent.
Fewer respondents expect there to be fewer jobs, down to 18 percent from 21 percent.
Consumers were slightly more pessimistic about short-term financial prospects, with 16.7 percent expecting incomes to increase, down from 17.1 percent last month.
However, fewer respondents expect their incomes to decrease, down to 13 percent from 16 percent last month.
“The Present Situation and Expectations Indexes improved due to consumers’ more favorable view regarding the economy and jobs,” said Franco.
Inflation expectations in December reached their lowest level since September 2021, she said, due in part to the recent decline in gas prices.
More people planned for vacations but plans to buy homes and big-ticket appliances waned.
“This shift in consumers’ preference from big-ticket items to services will continue in 2023, as will headwinds from inflation and interest rate hikes,” she added.
The cutoff date for preliminary results from the monthly Consumer Confidence Survey was Dec. 15.
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