January Indexes Portray Confused Consumer

NATIONAL REPORT -- Consumer confidence fell in January as more Americans feel their current job prospects are not as promising as in December, according to the Conference Board's Consumer Confidence Index. However, at the same time, the Reuters/University of Michigan Consumer Sentiment Index climbed 5.1 points from the end of December to reach 75 at the end of January, a small 1-point gain from the early-January reading.

"Consumer confidence is still at recessionary levels. December payrolls were relatively strong (up 200,000) due to a big jump of 42,000 couriers and messengers added to the workforce to help parcel companies such as FedEx and UPS deliver packages for the growing online retail sales industry. However, many of these holiday season couriers and messengers will be dropped from the payrolls, and there is further evidence that only 100,000 payrolls will be added in January," Chris G. Christopher Jr., senior principal economist at IHS Global Insight, said of the Conference Board results.

Christopher noted that there is increased optimism on future job prospects. In January, 16.2 percent of the respondents thought there will be more available jobs in the future, compared to 14 percent in December. In the first month of the new year, there was renewed optimism on future jobs, and increased pessimism on the current jobs front.

Leslie Levesque, senior economist with IHS Global Insight, analyzed the Reuters/University of Michigan consumer sentiment results. "Consumer sentiment improved for the fifth straight month in January as the index climbed further out of the recessionary levels posted in the summer months," reported Levesque. "The final reading showed consumers are feeling more optimistic than they were at the same time a year ago. Consumers' attitude toward current conditions has since improved, while their optimism of the future remains roughly the same. Consumers are feeling better about their current financial situation than they were a year ago."

In terms of monthly changes, the major game changer was the expectations index. "Consumers are looking to the future with more optimism, particularly on job prospects. In addition, pessimism surrounding future financial situations has eased notably," Levesque said.

While skepticism about growth in the economy persists, the noticeable improvements in the labor and financial markets have been enough to assuage the negative impact on overall sentiment. Continued progress on these fronts will keep consumers upbeat going forward, according to Levesque.