Confidence Index at 5-Month High
U.S. consumer confidence jumped in December to a five-month high, according to a report released Tuesday, beating even the most optimistic forecast as more Americans said jobs were plentiful and the outlook for the economy brightened.
The Conference Board’s index rose to 102.3 from a revised 92.6 in November, which was stronger than first reported. Expectations for the economy over the next six months also climbed to the highest level since July.
“We expect the consumer to roll into 2005 on a high note, as hiring is poised to accelerate and income gains will pick up as well,” said Stephen Stanley, chief economist at RBS Greenwich Capital.
His forecast of 98 for the index in December was the highest in a Bloomberg News survey of 51 economists.
Tuesday’s report suggests that spending by shoppers will contribute to the economic expansion into the first half of 2005. More consumers in the survey expected their incomes to rise in the coming six months, and a larger percentage expected to buy appliances, automobiles and houses.
Shoppers may have gotten a head start. Sales at retailers surged in the final days before Christmas. Amazon.com Inc., the world’s largest Internet retailer, said Monday that it had a single-day record number of orders.
Almost 1 in 5 Americans in the report said jobs were plentiful. The 19.4% was the largest share since July, when the figure was 19.7%. The proportion agreeing that jobs were hard to get dropped to 26.4% from 28%.
The share expecting their incomes to increase over the next six months rose to 20.7% this month, the highest in a year, from 19.2%.
The index of consumer expectations for the next six months rose to 99.9 from 90.2 in November, marking the biggest increase since President Bush declared an end to major combat missions in Iraq in May 2003. Optimism about the present situation increased to 105.9 from 96.3.
Economists had expected the New York-based research group’s overall confidence index to rise to 94, according to the median forecast in the Bloomberg survey. Estimates ranged from 91.7 to 98. The Conference Board surveyed 5,000 households about general economic conditions, employment prospects and spending plans.
The highest confidence reading, at almost 120, was in the region consisting of the eight Rocky Mountain states: Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming.
The biggest increases, of 26% each, were in the mountain states and the Middle Atlantic region, made up of New Jersey, New York and Pennsylvania.
Tuesday’s figures follow the release last week of the University of Michigan’s consumer sentiment index, which rose to 97.1 this month, its highest level since January. Sentiment among those surveyed by the university was bolstered by increased job prospects, higher stock prices and lower energy prices.
Sales at the nation’s retailers rose 4.3% in the week that ended Dec. 25 compared with a year earlier, according to the New York-based International Council of Shopping Centers-UBS weekly index. The increase was the biggest since July.
