Confidence Surges on Better Employment Outlook
NATIONAL REPORT -- The Conference Board's consumer confidence index surged again to 64.5 in December from 55.4 in November and now stands at the highest level since April.
The Board's index of present economic conditions increased to 46.7 from 38.3, the highest level since September 2008, and the labor index (percentage of respondents who think that jobs are plentiful minus the percentage who think jobs are hard to get) increased to minus 35.1 percent in December, from minus 37.4 percent in November.
Chris G. Christopher Jr., senior principal economist for HIS Global Insights, noted that even though consumer confidence is gaining some ground, Americans face many hurdles, especially on the housing, employment, and wage fronts. Wage gains are not keeping up with price increases and the housing market is taking a major beating, said Christopher.
Retailers have been managing their inventories well, so there might not be much on the shelves for post-Christmas shopping, he continued. In addition, retailers have been offering good deals in order to get people through their doors. In this weak consumer market, retailers are fighting for market share -- there will be winners and losers.
This is a relatively good report, especially at this time of year. IHS Global Insight is forecasting e-commerce retail sales to be in the $60-billion ballpark in the fourth quarter. IHS Global Insight is forecasting holiday sales to rise 4.8 percent above last year -- still below the 5.2 percent growth posted last year. Approximately 45 percent of this year's increase in holiday sales will be due to higher prices in year-over-year terms. Shoppers are spending more this holiday season and getting less.
Supporting the Conference Board's numbers, the Reuters/University of Michigan Consumer Sentiment Index jumped 5.8 points to 69.9 in December, its highest level since June. Current economic conditions improved by 2 points to 79.6 -- also the highest level since June. Meanwhile, the expectations index rose 8.2 points to 63.3 -- another high since June.
Christopher said these figures show that Americans are more optimistic as they are approaching the New Year. The Reuters/University of Michigan consumer sentiment index has been on the rise since the beginning of the fall. Recently, there has been some relatively positive news on the consumer front. Gasoline prices have fallen, food prices are still increasing but at a much slower pace, the stock market bounced back, real income growth returned, and employment prospects seem mildly better.