U.S. consumer confidence surged to a five-month peak in December, buoyed by increased optimism across all age and income groups. Americans expressed positive sentiments about current and future business conditions and the job market, suggesting potential support for the economy in early 2024.
The Conference Board reported the confidence boost on Wednesday, attributing it to factors like rising stock markets, a drop in the average mortgage rate from 23-year highs, and lower gasoline prices. While concerns about inflation persisted, consumers exhibited plans to make significant purchases, including motor vehicles, homes, and major appliances, in the coming six months. The positive trend aligns with economists’ expectations that the economy will avoid a recession next year.
Holiday Season Improves the Market:
Christopher Rupkey, chief economist at FWDBONDS in New York, noted the uptick in consumer spirits for the holiday season, indicating optimism for continued economic growth in the coming year. The Conference Board’s consumer confidence index rose to 110.7 in December, the highest since July, from a revised 101.0 in November. Both the present situation index and expectations index saw substantial increases, reflecting improved attitudes about the economy’s current state and future prospects.
The survey’s present situation index, based on consumers’ assessment of current business and labor market conditions, rose to 148.5 from 136.5 last month. Its expectations index, based on consumers’ short-term outlook for income, business and labor market conditions, jumped to 85.6 from 77.4 in November, bouncing above 80, a level historically associated with a recession within the next year. Consumers are serving up a healthy dose of holiday cheer as the days run out on 2023, turning far more positive about the economy, the Conference Board found in its monthly consumer confidence survey released on Wednesday. The business organization’s consumer confidence index increased in December to 110.7, up sharply from a downwardly revised 101.0 in November.
Consumer confidence soars past expectations in best level since July
Christmas Vibes for the Market:
The rise in consumer confidence comes at a crucial time, with the holiday season in full swing, and Christopher Rupkey’s observation that “Christmas is still coming this year” reflects the optimism surrounding economic growth. The increase in both the present situation index and expectations index underscores a renewed sense of positivity across various age groups and income levels, with households aged 35-54 and those with incomes of $125,000 and above experiencing the most significant gains.
Dana Peterson, chief economist at the Conference Board, noted that December’s boost in confidence is attributed to more positive evaluations of current business conditions and job availability, as well as less pessimistic views of future prospects. Rising prices remain a top consumer concern, but overall, the shift in sentiment paints a more optimistic economic picture as the year concludes.
