Consumer Confidence in January Highest Since End of 2021

SurveysFeb 01, 2024

Consumer Confidence in January Highest Since End of 2021

The Conference Board attributed the upbeat results to slowing inflation and the anticipation of lower interest rates.

Shoppers outside in winter weather
The Conference Board’s consumer confidence index rose to 114.8 in January—its highest level since December 2021—from a downwardly revised 108.0 in December 2023.
New York—U.S. consumer confidence climbed in January, reaching its highest level since December 2021 and marking the third consecutive monthly increase. 

The Conference Board’s consumer confidence index rose to 114.8 in January from a downwardly revised 108.0 in December.  

“January’s increase in consumer confidence likely reflected slower inflation, anticipation of lower interest rates ahead, and generally favorable employment conditions as companies continue to hoard labor,” said Dana Peterson, chief economist at The Conference Board. 

The gain was seen across all age groups, but largest for consumers 55 and over, said Peterson. 

Confidence improved for all income groups except those at the top. Households earnings $125,000 or more saw a slight decline. 

Consumers are still concerned about rising prices, according to write-in responses, but inflation expectations fell to a three-year low.  

However, plans to make big purchases were down. On a month-to-month and six-month basis, buying plans for autos, homes, and big-ticket appliances were down in all three categories. 

Respondents continued to favorably rate their income and personal finances over the next six months. 

As for a recession, its “Consumers’ Perceived Likelihood of a US Recession over the Next 12 Months” metric “gradually eased” in January, The Conference Board said. 

The Present Situation Index, which measures consumers’ current view of business and labor market conditions, soared to 161.3 from 147.2 in December. 

Peterson attributed the climb to more positive views of business conditions and employment. 

When asked to assess their current family financial conditions (a measure not included in calculating the Present Situation Index), more people said “good” and fewer people said “bad.” 

“This suggests consumers are starting off the year in good spirits about their current finances,” said Peterson. 

Consumers’ view of current business conditions was more positive in January, with the percentage of respondents who said current business conditions are “good” up to 23 percent from 21 percent, while those who said conditions are “bad” decreased to 14 percent from 17 percent.  

Consumers also had a positive view of the current labor market.  

The percentage of respondents who felt jobs were plentiful was up to 46 percent in January from 40 percent, while 10 percent said jobs were “hard to get,” down from 13 percent. 
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The Expectations Index, which measures consumers’ outlook for income, business, and labor market conditions in the near future, rose to 83.8 from the downwardly revised 81.9 in December. 

The index went up due to “receding pessimism around future business conditions, labor market, and income prospects,” said Peterson. 

Expectations that interest rates will rise in the year ahead “plummeted,” said the organization. 

The average 12-month inflation expectations fell to 5.2 percent, the lowest since March 2020 (4.5 percent). 

The number of consumers that expect stock prices to be higher in the year ahead was down slightly after a December surge but remained near three-year highs. 

Looking at short-term business conditions, respondents’ outlooks were more pessimistic, with 17 percent of respondents expecting business conditions to improve, down from 19 percent in December, while 16 percent expected them to worsen, down from 18 percent. 

Consumers’ assessment of the short-term labor market outlook in December was mixed. 

The percentage of respondents who expect more jobs to be available was down to 16 percent from 18 percent in December, while 15 percent expect fewer jobs to be available, down from 18 percent. 

Consumers’ short-term income expectations were also mixed. 

Fewer respondents expect to see their incomes increase (16 percent in January versus 18 percent in December) while 12 percent expect their incomes to decrease, down from 14 percent in December. 

The Conference Board recently added a set of questions to its monthly survey, asking consumers how they felt about their family finances. 

In January, consumers’ views of their families’ current financial situation were more positive while views of the six-month situation remained optimistic. 

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