Economy

Consumer Confidence Ignores Financial Market Volatility in January

Jon C. Ogg

Published: January 26, 2016 11:55 am

Last Updated: January 13, 2020 2:34 pm

If you just watched the U.S. stock market and the trends coming from China’s stock market, it would be very easy to become discouraged (or outright negative). Still, the stock market and the economy do not always match up to how confident consumers are at any given time. The Conference Board has released its Consumer Confidence Index for the month January, showing a moderate improvement this month after having increased in December. Its reading of 98.1 was over two points better than the 96.0 expected by Bloomberg, and it was better than the revised 96.3 reading from December.

Tuesday’s report showed that the Present Situation Index was unchanged at 116.4. A gain in the Expectations Index led the charge in January, rising to 85.9 in January from 83.0 in the prior report.

It may matter that the cutoff date for the preliminary results was January 14. The markets still were in a discovery period after that time. The Dow Jones Industrial Average closed at 16,379.05 on January 14, before hitting a low of 15,450 on January 20 and versus a most recent gain of 200 to 16,111 shortly after the Consumer Confidence report.

Consumers’ appraisal of current conditions was relatively flat in January. Consumers’ assessment of the labor market was modestly more positive. Consumers’ optimism about the short-term outlook improved somewhat in January. Consumers’ outlook for the labor market was also slightly more optimistic. Their assessment was as follows:

• The percentage saying business conditions are “good” was virtually unchanged at 27.2 percent.
• Those saying business conditions are “bad” declined slightly from 18.9 percent to 18.5 percent.
• The proportion claiming jobs are “plentiful” decreased from 24.2 percent to 22.8 percent.
• Those claiming jobs are “hard to get” declined to 23.4 percent from 24.5 percent.
• The percentage of consumers expecting business conditions to improve over the next six months rose from 14.5 percent to 16.2 percent.
• Those expecting business conditions to worsen edged down from 10.8 percent to 10.3 percent.
• Those anticipating more jobs in the months ahead increased from 12.4 percent to 13.2 percent.
• Those anticipating fewer jobs decreased slightly from 16.8 percent to 16.5 percent.
• The proportion of consumers expecting their incomes to increase improved from 16.3 percent to 18.1 percent.
• The proportion expecting a reduction in income increased from 9.5 percent to 10.8 percent.

The Conference Board described January by saying the public is not as concerned about the financial market volatility:

Consumer confidence improved slightly in January, following an increase in December. Consumers’ assessment of current conditions held steady, while their expectations for the next six months improved moderately. For now, consumers do not foresee the volatility in financial markets as having a negative impact on the economy.