Consumer Confidence Ticked Up in December

The Consumer Confidence Index from The Conference Board rose in December but remains at a historically moderate level overall. The composite index increased 3.9 points or 3.5 percent to 115.8 (see first chart). From a year ago, the index is up 33.0 percent.

The gain in the composite index was driven by the expectations component. The expectations component added 6.7 points, taking it to 96.9 while the present-situation component decreased 0.3 points to 144.1 (see first chart). The total index and both components remain well above typical recession lows but also remain below record highs. It should be noted that the data was collected before December 16 and may not fully reflect the rapid surge in new Covid cases due to the Omicron variant.

Within the expectations index, expected business conditions, employment conditions, and buying plans all had improvements while the expected income index fell slightly.  For the present situation index, current business conditions improved while employment conditions weakened.

Inflation expectations fell to 6.9 percent in December, down from 7.3 in November; expectations were 4.4 percent in January 2020 (see second chart). Historically, consumers’ inflation expectations have been well above actual inflation measures (see second chart).