Consumer confidence retreats in January
Consumer confidence rebounded in December, reaching a level of 64.8, but retreated in January as consumers pulled back, expressing more fears about gas prices and the overall American economy. Consumer confidence slumped in January after rebounding in the final months of 2011, The Conference Board said in its consumer sentiment index. The business analytics firm said the index for January now stands at a confidence level of 61.1, compared to 100 back in 1985. Consumer confidence rebounded in December, reaching a level of 64.8, but retreated in January as consumers pulled back, expressing more fears about gas prices and the overall American economy. The Conference Board said consumers were more optimistic about the job market at the end of 2011. However, that excitement was short-lived, with consumers turning more pessimistic about jobs in January. The consumer expectations index also fell from 77 in December to 76.2 as more individuals developed worries over business conditions and overall income prospects. The number of individuals claiming business conditions are "good" fell to 13.3% from 16.3% in December, while the numbers saying business conditions are bad increased from 33.5% to 38.7%. Consumers are less confident about jobs with the number of respondents saying jobs are plentiful falling from 6.6% to 6.1% in January.
"U.S. consumers remain a riddle wrapped inside an enigma," said Paul Ashworth with Capital Economics. "Despite stronger income growth, falling unemployment, rising equity prices, falling interest rates and unseasonably warm weather the Conference Board's measure of consumer confidence slumped in January to 61.1, from 64.8. The only negative factor this month was a very modest rebound in gasoline prices." However, he added the "good news, if there is any here, is that the expectations index fell only modestly to 76.2, from 77.0, and at that level is still pointing to real consumption growth of about 1% annualized. Unfortunately, that would represent a pretty sharp slowdown from the 2.0% growth in real consumption registered in the fourth quarter." Write to Kerri Panchuk.