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Consumer confidence makes a comeback

After two months of decline in the wake of the partial government shutdown, consumer confidence has bounced back to its highest level since September, according to The Conference Board.

December's index came in at 78.1, up from an upwardly revised figure of 72.0 in November and 72.4 in October.

“Consumer confidence rebounded in December and is now close to pre-government shutdown levels (September 2013, 80.2)," said Lynn Franco, director of economic indicators. "Sentiment regarding current conditions increased to a 5 ½ year high (April 2008, 81.9), with consumers attributing the improvement to more favorable economic and labor market conditions. Looking ahead, consumers expressed a greater degree of confidence in future economic and job prospects, but were moderately more pessimistic about their earning prospects. Despite the many challenges throughout 2013, consumers are in better spirits today than when the year began.”

As Franco acknowledged, the Present Situation Index increased to 76.2 from 73.5. This was predicated on a decrease in those claiming business conditions are "good," but an even larger decrease in those claiming they were "bad." Consumers were also more optimistic about the availability of jobs.

Looking ahead, the Expectations Index was up at 79.4, compared to 71.1 last month. More consumers expect business conditions to improve over the next six months, and the number of those expecting them to worsen was down by nearly 2 percentage points.

The greatest gain was in the labor market outlook, with those anticipating more jobs in the months ahead increasing from 13.1% to 17.1%. However, fewer consumers expected their incomes to increase in the short-term.

Overall consumer confidence reached a peak in June 2013, when it stood at 82.1.


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