U.S. consumer confidence increased again in December, with American consumers ending 2023 with a surge in confidence and restored optimism for 2024.
The Conference Board Consumer Confidence Index increased in December to 110.7 (1985=100), up from a downwardly revised 101.0 in November. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—rose to 148.5 (1985=100) from 136.5 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—leapt to 85.6 (1985=100) in December, up from its downwardly revised reading of 77.4 in November. This sharp increase brings expectations back to the levels of optimism last seen in July of this year.
“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,” said Dana Peterson, Chief Economist at The Conference Board. “While December’s renewed optimism was seen across all ages and household income levels, the gains were largest among householders aged 35-54 and households with income levels of $125,000 and above. December’s write-in responses revealed the top issue affecting consumers remains rising prices in general, while politics, interest rates, and global conflicts all saw downticks as top concerns. Consumers’ Perceived Likelihood of a US Recession over the Next 12 Months abated in December to the lowest level seen this year—though two-thirds still perceive a downturn is possible in 2024.”
Peterson added: “Assessments of the present situation rose in December, as seen by the more positive views of business conditions and the employment situation. By contrast, when asked to assess their current family financial conditions (a measure not included in calculating the Present Situation Index), the proportion reporting “good” ticked down while those saying “bad” rose slightly. This suggests consumers’ view of their current finances may paint a more tempered picture than the perception that overall conditions are better than a month ago.”
“Consumer expectations for the next six months also increased in December, reflecting improved confidence about future business conditions, job availability, and incomes. Expectations that interest rates will rise in the year ahead plummeted to the lowest levels since January 2021, and consumers’ outlook for stock prices rose to levels of optimism last seen in mid-2021. Meanwhile, average 12-month inflation expectations continued to recede, and now stands at 5.6 percent. Consumers’ views of their expected family financial situation, six months hence (not included in calculating the Expectations Index) also improved in December. Likewise, on a month-to-month basis, buying plans for autos, homes, and big-ticket appliances rose moderately across the board, ending the year on a slightly more positive note.”
Present Situation:
Consumers’ assessment of current business conditions was more positive in December.
- 21.7% of consumers said business conditions were “good,” up from 18.6% in November.
- 16.5% said business conditions were “bad,” down from 18.9%.
Consumers’ appraisal of the labor market was also more positive in December.
- 40.7% of consumers said jobs were “plentiful,” up from 38.6% in November.
- 13.2% of consumers said jobs were “hard to get,” down from 15.6%.
Expectations Six Months Hence
Consumers were less pessimistic about the short-term business conditions outlook in December.
- 18.7% of consumers expect business conditions to improve, up from 17.2% in November.
- 16.0% expect business conditions to worsen, down from 20.1%.
Consumers’ assessment of the short-term labor market outlook was more optimistic in December.
- 17.8% of consumers expect more jobs to be available, up from 16.7% in November.
- 17.2% anticipate fewer jobs, down from 20.1%.
Consumers’ assessment of their short-term income prospects improved in December.
- 18.7% of consumers expect their incomes to increase, up from 17.7% in November.
- 12.6% expect their incomes to decrease, virtually unchanged from 12.7%.
Assessment of Family Finances and Recession Risk
- Consumers’ assessment of their Family’s Current Financial Situation pulled back slightly in December.
- However, consumers became considerably more optimistic in December when assessing their Family’s Expected Financial Situation, Six Months Hence.
- Consumers’ Perceived Likelihood of a US Recession over the Next 12 Months abated in December to the lowest levels seen this year—though two-thirds still perceive a downturn is possible.
The monthly Consumer Confidence Survey®, based on an online sample, is conducted for The Conference Board by Toluna, a technology company that delivers real-time consumer insights and market research through its innovative technology, expertise, and panel of over 36 million consumers. The cutoff date for the preliminary results was December 14th.
