On December 23, The Conference Board reported that its Consumer Confidence Index declined by 8.1 points in December to 104.7 (1985=100). This is its lowest reading since September. Drop was due to dimmer views of future business conditions and incomes,the group noted.
“Much like in last week’s sentiment report, politics are influencing consumer confidence this holiday season," said Nationwide Financial Markets Economist Oren Klachkin, in a statement. "This report marks a sour end to 2024, but we think it overstates any true deterioration in attitudes."
“We think confidence will send an encouraging signal in 2025 as tailwinds from a solid economy overpower price and policy concerns," Klachkin added. “Rising incomes, stock market gains, gradually easing inflation and healthy household balance sheets will support consumers’ spirits next year, though policy changes and uncertainty could swing attitudes.”
Breaking out the report by age, the fall was led by consumers over 35 years old; consumers under 35 became more confident.
Among income groups, the decline was concentrated in consumers with household earnings between $25K and $100K, while consumers at the bottom and top of the income range reported only limited changes in confidence. On a six-month moving average basis, consumers aged under 35 and those earning over $100K remained the most confident.
“Consumers became a bit less bullish about the stock market in December: 52.9% expected stock prices to increase over the year ahead, down from a record high of 57.2% in November,“ said Dana M. Peterson, Chief Economist at The Conference Board, in a statement. "Also, 25% of consumers expected stock prices to decline, up from 21.7%. The share of consumers expecting higher interest rates over the next 12 months ticked up to 48.5% but remained near recent lows. The share expecting lower rates eased to 29.3%—down from recent months but still quite high.”
The proportion of consumers anticipating a recession over the next 12 months was stable near the series low.
Present Situation
Consumers’ assessments of current business conditions eroded somewhat in December.
- 19.1% of consumers said business conditions were “good,” down from 21.6% in November.
- 16.7% said business conditions were “bad,” up from 15.3%.
Consumers’ appraisals of the labor market improved in December.
- 37.0% of consumers said jobs were “plentiful,” up from 33.6% in November.
- 14.8% of consumers said jobs were “hard to get,” down from 15.2%.
Expectations Six Months Hence
Consumers were less optimistic about the outlook for business conditions in December.
- 21.7% of consumers expected business conditions to improve, down from 24.7% in November.
- 18.3% expected business conditions to worsen, up from 15.9%.
Consumers’ assessments of the labor market outlook returned to being pessimistic.
- 19.1% of consumers expected more jobs to be available, down from 22.8% in November.
- 21.3% anticipated fewer jobs, up from 17.9%.
Consumers’ assessments of their income prospects were less optimistic in December.
- 17.2% of consumers expected their incomes to increase, down from 20.7% in November.
- 14.3% expected their incomes to decrease, up from 12.1% in November.
