WASHINGTON — Consumer confidence in the United States has experienced a decline for the second month in a row as reported by a prominent business research organization on Tuesday.
The Conference Board revealed that its consumer confidence index fell to 104.1 in January, down from December’s figure of 109.5, which is below the anticipated economist forecast of 105.8. Additionally, December’s index was adjusted upward by 4.8 points, although it still showed a decrease from November.
This consumer confidence index evaluates Americans’ perceptions of current economic conditions as well as their expectations for the upcoming six months. As the year 2024 drew to a close, consumers had displayed greater confidence, and holiday season spending remained robust. Despite increasing borrowing costs, retail sales saw a 0.4% rise in December, and retailers generally reported solid sales during the winter shopping period.
According to the board, consumer perceptions of current conditions plummeted by 9.7 points to a reading of 134.3 in January, marking the first decrease in views concerning the labor market since September. Furthermore, the gauge measuring Americans’ short-term expectations regarding income, business, and job opportunities decreased by 2.6 points to 83.9. A score below 80 on this measure can indicate the possibility of a recession on the horizon.
Nevertheless, the percentage of consumers anticipating a recession within the next year remained stable at the lower end of the historical range, providing a glimmer of optimism. Despite the drop in the board’s index over the past two months, consumer spending has persisted, supporting the U.S. economy since the substantial recovery from the COVID-19 recession that began in spring 2020.
The government reported in December that the U.S. economy expanded at a robust annual rate of 3.1% between July and September, spurred by strong consumer spending and a rise in exports. GDP growth has exceeded 2% in eight out of the last nine quarters, showcasing resilience in economic performance.
However, this surge in spending may be taking a toll on consumers. A report from the Federal Reserve Bank of Philadelphia indicated a recent uptick in credit card balances and delinquencies, with a notable increase in active cardholders opting for minimum payments, reaching a 12-year high.
Additionally, the proportion of those surveyed by the Conference Board who expressed intentions to buy “big-ticket” items in the next six months saw a minor decrease compared to the December figures. With consumer spending comprising approximately two-thirds of U.S. economic activity, it remains a critical indicator for economists monitoring the economic sentiment among the American populace.
