US Consumer Confidence Increases in December: Conference Board
US consumer confidence rose faster than expected in December, with sentiment toward the current situation hitting a five-year high on the heels of an improved labour market.
The Conference Board Consumer Confidence Index increased to 78.1, after falling to 72 a month earlier following the government shutdown. Economists polled by Bloomberg called for an increase to 76.
Consumer confidence returned to pre-government shutdown levels, the Conference Board reported. Sentiment toward current conditions rose to the highest level since April 2008, due largely to unexpected gains in the labour market. The US economy added more than 400,000 nonfarm payrolls in October and November, as the unemployment rate fell to 7 percent, a five-year low.
Consumers’ expectations increased in December after falling the previous month. A greater percentage of consumers expect business conditions to improve in the next six months. The outlook on the labour market improved considerably over the previous month, as more than 17 percent of respondents anticipate more jobs in the next six months.
“Looking ahead, consumers expressed a greater degree of confidence in future economic and job prospects, but were moderately more pessimistic about their earnings prospects,” said Lynn Franco of the Conference Board. “Despite the many challenges throughout 2013, consumers are in better spirits today than when the year began.”
Since the year began, household finances have improved considerably on the heels of job growth, rising home values and record-setting stock market gains. These factors will keep optimism elevated and consumer spending underpinned after the holiday season. Consumer spending, which makes up nearly 70 percent of the US economy, “will continue to do some of the heavy lifting for the economy,” according to Ryan Sweet of Moody’s Analytics.
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