Consumer confidence index surges in December

Soaring stock market, robust jobs outlook fuel optimism

Consumer confidence reached another post-recession high in December, as the stock market soared to a new record after the election of Donald Trump and the outlook for the job market remains robust.

The Conference Board said Tuesday its consumer confidence index increased to 113.7 in December from an upwardly revised 109.4 in November.

“The post-election surge in optimism for the economy, jobs and income prospects, as well as for stock prices which reached a 13-year high, was most pronounced among older consumers,” said Lynn Franco, director of economic indicators at the Conference Board, a nonprofit business research organization.

Much of the confidence boost came from expectations that short-term economic conditions will improve. The Expectations Index, which measures consumers’ outlook for the next six months, rose from 94.4 in November to 105.5, a 13year high.

Consumers who expect business conditions to improve in the next six months increased to 23.6% from 16.4%. Those expecting business conditions to worsen declined from 9.9% to 8.7%.

But consumers’ assessment of current conditions declined in December. The Present Situation Index fell to 126.1 from 132 in November. Consumers who said business conditions are “good” fell to 29.2% from 29.7%. Those saying business conditions are “bad” increased to 17.3% from 15.2%.

Consumers generally remain optimistic about labor market strength. Those expecting more jobs in the coming months increased from 16.1% to 21%. But those expecting fewer jobs also rose to 14% from 13.5%.

Consumers also expect their incomes to continue to grow. The percentage of

consumers expecting rising incomes increased to 21% from 17.4% in November. Consumers expecting a cut in their incomes declined to 8.6% from 9.2%.

The U.S. economy grew at a 3.5% annual pace from July to September, fastest in two years. Unemployment is at a nine-year low of 4.6%. Employers have added 180,000 jobs a month this year, down from an average 229,000 in 2015 but still solid.

Economists monitor consumers’ mood closely because their spending accounts for about 70% of U.S. economic output.

“The election of Donald Trump has raised household expectations for the economy to a very high level,” Stephen Stanley, chief economist at Amherst Pierpont Securities, wrote in a research note. “It remains to be seen whether Trump can deliver,” but the burst in confidence could drive consumer spending higher.