Consumer confidence rises to near post-recession peak
Consumers are feeling better about the economy, according to the monthly survey from the Conference Board that shows confidence levels near the post-recession peak.
The Consumer Confidence index stood at 64.5 in December, up nearly 10 points from a revised 55.2 in November. That month was itself a 15-point gain from October’s 40.9, the lowest level since the recession.
Although the index is still below the 90 level that economists consider the threshold for a stable economy, December’s rating that was released Tuesday was the highest since 66 in April.
The highest the index has been since the recession ended was 72 in February.
More shoppers believe that business conditions are good — 16.6% compared with 13.9% in November, according to the Conference Board. And fewer people — 41.8% compared with 43% in November — say that jobs are hard to find.
A higher percentage also said that the outlook for business and jobs will continue to improve during the next six months.
A similar, weekly index from pollster Gallup also saw consumer confidence improve in December. That measure, which was also released Tuesday, combined Americans’ ratings of current economic conditions and their perceptions of whether the economy is deteriorating or improving.
Gallup said December is shaping up as the most optimistic month since June.
But consumers are still more dour than they were in the summer, before concerns about the U.S. debt downgrade and Europe’s fiscal woes sent confidence crashing in August. December’s rating on Gallup’s index, which ranges from -100 to 100, is averaging -38 so far.
That’s an improvement from -45 in November but still worse than at any point between January and June. Confidence levels were also more depressed than they were during the holiday season in 2010 and 2009, according to Gallup.
Still, the month-over-month boost could signal better times to come because consumer spending makes up about 70% of U.S. economic activity.
Another key measure last week from Thomson Reuters and the University of Michigan also found consumers feeling more positive, with 29% expecting good economic times ahead compared with the 19% who said the same in November.
Analysts from Deutsche Bank said Tuesday that the cycle of “improving confidence, rising consumption, expanding output and additional income growth” may be in the works.
But economists warned that the bump could also be the result of fleeting Christmas cheer. Retailers, many of whom offered longer hours and steeper discounts, saw spikes in shoppers over the Thanksgiving and Black Friday rush and again just before Christmas.
Nearly 7 in 10 consumers went shopping at brick-and-mortar retailers during the week that ended Monday and spent 4.7% more per visit than the previous week, according to research from the NPD Group Inc.
Beauty stores saw 31% more visits from shoppers, while apparel vendors enjoyed a 26% bump. Bookstores, shoe stores and department stores also experienced double-digit increases from the previous week.
But once the gift-giving frenzy dies down, shoppers may be “bought out” or “tapped out” after the first week of January, said NPD chief industry analyst Marshal Cohen.
“The front-loaded holiday this year will likely take its biggest toll on the back end … the post-holiday period,” he said.
Lynn Franco, director of the Conference Board’s research center, also worried that ongoing weakness in the job and real estate markets could send shoppers back into the doldrums.
“While consumers are ending the year in a somewhat more upbeat mood, it is too soon to tell if this is a rebound from earlier declines or a sustainable shift in attitudes,” Franco said in a statement.
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