WASHINGTON (12/31/15)--The Conference Board’s monthly consumer confidence index regained much of what it lost in November with a 3.9 point increase this month (Economy.com Dec. 29).
After falling nearly 7 points the prior month, the index rose back to 96.5 in December, keeping the overall index near its yearlong trend of the upper 90s.
“The labor market is the primary reason for this increase, with unemployment holding steady and labor participation on a slight uptick last month,” said Jeremy Cohn, Moody’s analyst (Economy.com). “This puts the index in line with the three-month moving average.”
The present conditions subcomponent jumped 4.4 points to 115.3 during the month, with 2.1% more people reporting that jobs were plentiful.
The future expectations component climbed 3.5 points to 83.9, “driven primarily by decreasing pessimism over jobs and income in the coming six months,” Cohn said, adding that expectations for business conditions were less rosy.
Meanwhile, plans to make a major purchase such as a vehicle or a home slipped in December.
Only 10.5% planned to buy a car, a 2.2 point step back, and 5.8% said they plan to buy a home, a drop of 0.2 points.
“The trend in consumer confidence has shown itself in lackluster retail this month versus last year, when confidence was on the rise,” Cohn said. “The new interest rate environment coming out of the (Federal Open Market Committee) announcement this month seems to already be softening consumers’ purchase intentions on autos, which are down over last year. However, home purchase intentions are up over last year, despite the news over interest rates, potentially signaling a shift in priorities among the large millennial population.”