In January, there was a noteworthy uptick in US consumer confidence, which hit the highest point since the end of 2021. This surge was underpinned by an increasingly positive outlook on the economy and job market, coupled with a more optimistic perspective on inflation. According to data released on Tuesday, the Conference Board’s sentiment gauge rose from a 108 in the preceding month to 114.8, aligning with the median estimate in a Bloomberg survey.
Of particular interest, consumer sentiment showed that the inflation rate is anticipated to average 5.2% over the next 12 months, marking the lowest level since March 2020.
Dana Peterson, Chief Economist at the Conference Board, suggests that the upswing in consumer confidence in January can be attributed to decelerating inflation, anticipation of upcoming reductions in interest rates, and generally favorable employment conditions with companies maintaining a robust labor force.
This sustained increase in confidence for the third consecutive month also suggests that the momentum observed in household spending towards the end of the preceding year will persevere. When American consumers feels confident about the economy, they do tend to spend!
However, the data on consumer confidence does show moderating influences in planned purchasing, with consumers’ intentions on purchasing cars, homes, and major appliances all receding from last month’s levels. Whirlpool Corp.’s projection of weaker sales for the year, falling short of Wall Street expectations, raises concerns about a potential contraction in significant expenditure. Results disclosed on Monday for the proprietor of the Maytag and KitchenAid brands also indicate a sluggish housing market.
Despite this nuanced outlook, sentiments regarding the job market exhibited definite improvement compared to December. The proportion of consumers expressing the view that jobs are currently plentiful increased for a third consecutive month, reaching the highest level since April. Moreover, the metric differentiating between those perceiving jobs as “plentiful” versus “challenging to obtain”, closely monitored by economists to assess labor-market strength, also showed an increase in optimism.
At the same time, data released on Tuesday indicated a surge in job openings in December to a three-month high, surpassing all projections in a Bloomberg survey of economists.
Mark Nicette, Bloomberg.com
