Consumer Confidence Climbs in December

New York—U.S. consumer confidence climbed in December, reaching its highest level since July, as optimism about the labor market and current and future business conditions returned.

Notably, two-thirds of respondents still think a recession is possible in 2024.

The Conference Board’s consumer confidence index rose to 110.7 in December from a downwardly revised 101.0 in November.  

“December’s increase in consumer confidence reflected more positive ratings of current business conditions and job availability, as well as less pessimistic views of business, labor market, and personal income prospects over the next six months,” said Dana Peterson, chief economist at The Conference Board.

Optimism was seen across all ages and household income levels, said Peterson, but the gains were largest among householders aged 35-54 and households with income levels of $125,000 and above. 

According to December’s write-in responses, the No.1 issue affecting consumers was rising prices. Issues like politics, interest rates, and global conflicts saw downticks as top concerns. 

As for a recession, the “Consumers’ Perceived Likelihood of a U.S. Recession over the Next 12 Months” numbers fell to the lowest level seen this year. However, two-thirds still see a possible downturn in 2024.

The Present Situation Index, which measures consumers’ current view of business and labor market conditions, rose to 148.5 from 136.5 last month.

 “Assessments of the present situation rose in December, as seen by the more positive views of business conditions and the employment situation,” noted Peterson.

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

“This suggests consumers’ view of their current finances may paint a more tempered picture than the perception that overall conditions are better than a month ago,” said Peterson.

Consumers’ view of current business conditions was more positive in December, with the percentage of respondents who said current business conditions are “good” up to 22 percent from 19 percent, while those who said conditions are “bad” decreased to 17 percent from 19 percent. 

Consumers also had a positive view of the current labor market.  
 
The percentage of respondents who felt jobs were plentiful was up to 41 percent in December from 39 percent, while 13 percent said jobs were “hard to get,” down from 16 percent.

 
The Expectations Index, which measures consumers’ outlook for income, business, and labor market conditions in the near future, climbed to 85.6 from the downwardly revised 77.4 in November. 

“Expectations that interest rates will rise in the year ahead plummeted to the lowest levels since January 2021, and consumers’ outlook for stock prices rose to levels of optimism last seen in mid-2021,” added Peterson.

“On a month-to-month basis, buying plans for autos, homes, and big-ticket appliances rose moderately across the board, ending the year on a slightly more positive note.”

Looking at short-term business conditions, respondents’ outlooks were more optimistic, with 19 percent of respondents expecting business conditions to improve, up from 17 percent in November, while 16 percent expected them to worsen, down from 20 percent.

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

The percentage of respondents who expect more jobs to be available was up to 18 percent from 17 percent in November, while 17 percent expect fewer jobs to be available, down from 20 percent.

Consumers’ short-term income expectations were also somewhat more optimistic.

More respondents expect to see their incomes increase (19 percent in December versus 18 percent in November) while 13 percent expect their incomes to decrease, virtually unchanged from November.

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

In December, consumers’ views of their families’ current financial situation dipped slightly while views of the six-month situation were more optimistic.