After two consecutive months of falls, consumer confidence bounces backin December in the United States, reaching its highest level since April.
On the other hand, a change in consumer behavior may be on the horizon, with some forecasting that customers will pick services over high-priced goods around the year 2023.
The consumer confidence index published by the Conference Board increased to 108.3 in December, up from 101.4 the previous month.
Shoppers’ Interest May Shift To Services Over Big-ticket Items In 2023
According to Lynn Franco, senior director of economic indicators at The Conference Board:
“„Consumer confidence bounced back in December, reversing consecutive declines in October and November to reach its highest level since April 2022.
his was reported by Franco after the index had reached its lowest point since April 2022.
The Present Situation Index, which evaluates consumers' outlook on current businessand labor market circumstances, increased to 147.2 in December, up from 138.3 in November. The increase came about as a result of an increase in optimism among consumers.
US consumer confidence bounces back✅
The percentage of customers who rated the current state of business as "good" increased to 19 percent, up from 18 percent in the previous month, while the percentage of customers who rated the current state of business as "bad" fell, down to 20 percent from 24 percent in the previous month.
In addition, consumers have a more optimistic outlook on the labor market, with 48 percent of respondents saying jobs are "plentiful," which is an increase from 45 percent in the previous month.
The number of respondents who described finding work as "hard to get" decreased from 14 percent the previous month to 12 percent this month.
The Expectations Index published by the Conference Board, which evaluates consumers' short-term prognosis for conditions in the income, business, and labor market, increased to 82.4 from a previous reading of 76.7.
According to the Conference Board, the index is still hovering around 80, which is a level that is connected with the recession. This is an important point to note.
A slightly more optimistic assessment of the short-term economic outlook was taken by respondents, with 20.4 percent expecting business conditions to improve, which is an increase from the 19.8 percent who had this expectation in November.
The percentage of people who anticipated a worsening of situations fell from 21 percent one month ago to 20 percent today.
The outlook that consumers have on the short-term labor market is likewise optimistic, with the percentage of respondents who anticipate an increase in the number of jobs available rising from 19 percent to 20 percent.
The percentage of respondents who anticipate a decrease in the number of jobs has dropped from 21 to 18 percent.
In comparison to the previous month, consumers have a little more dismal outlook for their short-term financial prospects, with 16.7 percent anticipating an increase in their incomes. This number is down from 17.1 percent.
On the other hand, the percentage of respondents who anticipate a drop in their incomes has decreased from 16 percent one month ago to 13 percent today. According to Franco:
“„The Present Situation and Expectations Indexes improved due to consumers’ more favorable view regarding the economy and jobs.- Lynn Franco
According to her, consumers' expectations of inflation dropped to their lowest level since September 2021 in December, in part because of the recent drop in the price of gasoline.
The number of people who planned to go on vacation increased, but the number of people who wanted to buy homes or expensive items decreased.
She went on to say that in 2023:
“„This shift in consumers’ preference from big-ticket items to services will continue in 2023, as will headwinds from inflation and interest rate hikes.- Lynn Franco
The fifteenth of December served as the cutoff date for the preliminary results of the monthly Consumer Confidence Survey.
Present Situation
Consumers’ assessment of current business conditionsimproved in December.
- 19.0% of consumers said business conditions were “good,” up from 17.8%.
- 20.1% said business conditions were “bad,” down from 23.6%.
Consumers’ appraisal of the labor marketwas also more favorable.
- 47.8% of consumers said jobs were “plentiful,” up from 45.2%.
- 12.0% of consumers said jobs were “hard to get,” down from 13.7%.
Expectations Six Months Hence
Consumers were less pessimistic about the short-term business conditions outlookin December.
- 20.4% of consumers expect business conditions to improve, up from 19.8%.
- 20.3% expect business conditions to worsen, down from 21.0%.
Consumers were more upbeat about the short-term labor market outlook.
- 19.5% of consumers expect more jobs to be available, up from 18.5%.
- 18.3% anticipate fewer jobs, down from 21.2%.
Consumers were mixed about their short-termincome prospects.
- 16.7% of consumers expect their incomes to increase, down slightly from 17.1%.
- However, 13.3% expect their incomes will decrease, down from 15.8%.