Consumer Confidence Gains as Job Market Improves
Consumer confidence rose in December to the highest level in eight months as the job market continued to show signs of improvement.
The Conference Board’s index increased to 64.5 this month, its highest reading since April. Today’s report also revised November’s reading to 55.2. The measure of consumer confidence in the U.S. averaged 53.7 during the recession that ended in June 2009.
Unemployment dropped last month to 8.6 percent, its lowest in more than two years, as gasoline prices fell to their lowest since February, prompting households to take advantage of discounts during the holiday shopping season. Improving sentiment might help sustain household purchases, which account for roughly 70 percent of the U.S. economy.
“A large part of the problem in the economy is one of confidence, and to the extent that sentiment begins improving it would be a positive for growth,” said Dana Saporta, director of U.S. economic research at Credit Suisse in New York. However, whether higher consumer confidence is sustained “depends on the employment situation going forward.”
The Conference Board’s measure of present conditions increased to 46.7, its highest since September 2008, from 38.3 last month, while its measure of expectations for the next six months climbed from 66.4 to 76.4.
The share of consumers saying they believed jobs were plentiful rose in December to its highest since January 2009, while those saying employment was hard to get decreased to the lowest since January 2009.
Further still, the percent of respondents who said they expected more jobs to become available in the next six months increased, and those projecting their incomes will increase in the next six months rose to the highest level since February.
In the week ended December 17, initial unemployment benefits claims declined by 4,000 to 364,000, the lowest level since April 2008, while those continuing to receive benefits also fell, by 79,000 to 3.55 million in the prior week, the lowest since September 2008. November’s unemployment rate was 8.6 percent, the lowest since March 2009.
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