Written by Steven Hansen
The latest Conference Board Consumer Confidence Index’s headline number is 128.1 (1985=100), down from 135.7 in November.
Analyst Opinion of Conference Board Consumer Confidence
Consumer confidence has been on a multi-year upswing. The softening this month and last is predicted to be the beginning of a downtrend – and is showing a growing uncertainty by consumers.
The consensus range from Econoday was 131.0 to 135.6 (consensus 134.0). This month’s index is based on data collected through 13 December 2018.
Per Lynn Franco, Director of Economic Indicators at The Conference Board:
Consumer Confidence decreased in December, following a moderate decline in November. Expectations regarding job prospects and business conditions weakened, but still suggest that the economy will continue expanding at a solid pace in the short-term. While consumers are ending 2018 on a strong note, back-to-back declines in Expectations are reflective of an increasing concern that the pace of economic growth will begin moderating in the first half of 2019.
Analysis from Econoday:
In its least optimistic showing since July, the consumer confidence index fell a sharp 8.3 points to a 128.1 December level that is several points below Econoday’s consensus range. The good news in the report is a further and sharp decline in those saying jobs are currently “hard to get”, down 1 percentage point to a very low 11.6 percent reading that, like this morning’s jobless claims data, should confirm expectations for strength in the December employment report.
The weakness in today’s confidence report is not in current conditions but, for a second straight month, in expectations where job prospects and the outlook for business conditions have been eroding. Those expecting more jobs in the months ahead decreased sharply from 22.7 percent to 16.6 percent while those anticipating fewer jobs increased from 11.2 percent to 14.4 percent.
Trouble for the outlook is also hinted at by 6-month buying plans which are down for vehicles (12.7 vs 13.8 percent), homes (6.0 vs 6.4 percent) and very noticeably for appliances (47.7 vs 54.8 percent). The latter two readings are not positive indications for future residential investment.
The stock market doesn’t carry great weight in this report which focuses mostly on the perceived health of the labor market. And despite this month’s poor performance for stocks, the percentage of bulls actually rose 1.5 percentage points to 37.1 percent. The percentage of bears, however, also rose, up 3.7 points to 31.2 percent.
Much like this report, the current conditions component in the consumer sentiment report also showed strength in contrast to expectations. But this is still good news not only for immediate employment data but also for how strong holiday spending will prove. Yet for the initial outlook for the first-half of 2019, the weakening in expectations is hinting at a slowing for economic growth.
Other readings in today’s report include a sharp 4 tenths downtick in 12-month inflation expectations to a 4.3 percent level which is very low for this report. This may well catch the eye of Federal Reserve policy makers who, in an effort to stem the risk of inflation, are planning on a couple of more rate hikes next year. For the record, the present situation index for December fell 1.1 points to 171.6 with expectations down a very sharp 13.2 points to 112.3.
Caveats Relating to CB Consumer Confidence
From the Conference Board:
The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch.
Nielsen Holdings plc (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers watch and buy. Nielsen’s Watch segment provides media and advertising clients with Total Audience measurement services for all devices on which content — video, audio and text — is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry’s only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen also provides its clients with analytics that help improve performance. Nielsen, an S&P 500 company, has operations in over 100 countries, covering more than 90 percent of the world’s population. For more information, visit www.nielsen.com.
From Econoday:
The Conference Board compiles a survey of consumer attitudes on the economy. The headline Consumer Confidence Index is based on consumers’ perceptions of current business and employment conditions, as well as their expectations for six months hence regarding business conditions, employment, and income. Three thousand households across the country are surveyed each month. In general, while the level of consumer confidence is associated with consumer spending, the two do not move in tandem each and every month.
Consumer confidence and retail sales generally move in tandem but not necessarily each and every month. Note that consumer assessments of employment conditions are heavily weighted in the consumer confidence index.
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