(Jan 28): US consumer confidence declined in January to the lowest level in more than a decade on more pessimistic views of the economy and labour market.
The Conference Board’s gauge decreased to 84.5, from an upwardly revised 94.2 last month, data out on Tuesday showed. The figure was the lowest since May 2014 and fell short of all estimates in a Bloomberg survey of economists.
A measure of expectations for the next six months fell in January to the lowest since April, while a gauge of present conditions dropped to the lowest in nearly five years.
“The expectations index has greatly overstated the weakness in spending in recent quarters,” Oliver Allen, senior US economist at Pantheon Macroeconomics, said in a note. “But we’d be surprised if its recent deterioration proves to be an entirely false signal, particularly given the recent stagnation in real incomes and the already rock-bottom personal saving rate.”
After a slight improvement in December, confidence resumed its downward slide amid concerns about high prices and sluggish job growth. Economists project the labour market will largely remain stagnant this year with limited job opportunities, though they don’t anticipate widespread layoffs.
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In write-in responses to the survey, consumers often mentioned prices of oil, gas and groceries, Dana Peterson, chief economist at the Conference Board, said in a statement. Mentions of politics, the labour market and health insurance also rose, she said.
Labour views
The share of consumers that said jobs were currently hard to get was the highest since February 2021, while the share saying jobs were plentiful deteriorated. The difference between these two — a metric closely followed by economists to gauge the job market — narrowed to the worst reading in years.
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Fewer Americans expect their incomes to rise in the coming months. That’s prompting consumers to cut back on vacation plans and approach big-ticket purchases like new cars and certain appliances more cautiously.
Confidence declined broadly by age and household income. Sentiment for workers between the ages of 35 and 54 and for those earning more than US$50,000 a year plunged to some of the lowest levels since 2013.
The Conference Board’s index generally focuses on labour market conditions, whereas a separate metric of consumer sentiment from the University of Michigan emphasises views about personal finances and the cost of living. The university’s gauge increased to a five-month high in January as Americans were more optimistic about the economy and their finances.
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