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The robust employment market and stable business environment have made Americans feel very festive this December.
According to fresh data issued by the Conference Board on Wednesday, US consumer confidence increased for the third straight month, reaching its highest level since July, as concerns about the recession decreased.
The Consumer Confidence Index of the business group, which is a leading economic indication of future spending and saving behaviors by families, increased this month from a downwardly revised 101 in November to a level of 110.7.
Furthermore, the survey states that throughout the next 12 months, consumers’ “perceived likelihood of a US recession” dropped to its lowest level of the year.
According to FactSet average estimates, the preliminary figure for December significantly surpassed economists’ forecasts, which were 104.5.
Dana Peterson, chief economist at The Conference Board, said in a statement that “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.”
A more promising future
An increase in consumers’ outlooks for the next six months, notably with regard to their salaries, job prospects, and general business conditions, helped to support the December headline index.
The Conference Board’s Expectations Index, which was downwardly reduced to 77.4 in November, soared up to 85.6.
Consumers expressed greater confidence in the future, believing that their financial situation would improve, the stock market would continue to climb, and interest rates would not increase significantly.
For the third time in a row, the Federal Reserve kept interest rates unchanged last week and hinted that they might be lowered in 2024. The Conference Board survey had a deadline of December 14, one day following the Federal Reserve’s announcement.
Consequently, more respondents stated that they intended to take a trip and purchase expensive products like vehicles and appliances. Indeed, 55.8% of those surveyed stated they planned to take a holiday over the following six months. According to Conference Board historical data, that represents the greatest share since late 2019.
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Additionally, the Present Situations Index increased, going from 136.5 to 148.5. It is the highest level that index has been since March.
Wells Fargo economists stated in a report released on Wednesday that while there are many factors that contribute to growing confidence, three major ones are the stock market, the unemployment rate, and the cost of a gallon of petrol. “The last three all went in the right direction.”
Concerns about inflation and some uncertainty
The Conference Board states that historically, a recession has been predicted when the Expectations Index falls below 80 during the next year.
According to the research, two-thirds of survey respondents said they believe a downturn is still probable next year, despite the fact that recession worries have reached their lowest point of the year.
Even if inflation has decreased dramatically over the last 18 months, rising costs nevertheless have a big impact on people.
Global conflicts, interest rates, and politics witnessed downshifts, but rising prices led the write-in list of concerns, according to Peterson’s research.
“The proportion reporting ‘good’ ticked down while those saying ‘bad’ rose slightly when asked to assess their current family financial conditions (a measure not included in calculating the Present Situation Index),” according to Peterson. “This implies that consumers’ perceptions of their current financial situation may be more realistic than their belief that things h
