EconoFACTS

January 25, 2022 | 10:31

U.S. Consumer Confidence Holds Up In This Multiverse of Madness

Economist

Senior Economist and Managing Director
Economics

Jennifer has been with BMO Capital Markets Economics for over two decades and is perhaps best known for her high... (Read more)

Jennifer Lee

Senior Economist and Managing Director
Economics

Jennifer has been with BMO Capital Markets Economics for over two decades and is perhaps best known for her high... (Read more)

Considering the headwinds blowing in consumers' faces ... confidence is still quite sturdy.

The U.S. Conference Board's consumer confidence index wobbled at the start of the year, slipping 1.4 pts in January to a 2-month low of 113.8. Though this did not erase the gains over the prior three months, the breakdown was telling of what consumers are worried about. The situation right now (lots of jobs available, rates are still low, though what's with prices of everything these days?) is fine: the present situation rose for the second month in a row, up 3.4 pts to a 5-month high of 148.2. How things will unfold, say, six months from now, is another story. Concerns about higher interest rates courtesy of a central bank that is determined to bring inflation back down to earth, may be keeping Americans up at night. The expectations component dropped 4.6 pts (first setback since September) to a 2-month low of 90.8. But still.... inflation expectations over the next 12 months edged lower. Interesting.

Jobs, jobs, jobs ...

But having a job, a steady paycheck, is the most important factor for everyone. And so far, the labor market is still very tight. Fewer respondents nodded when asked "Do you find jobs hard to get these days?", but fewer respondents nodded when asked "Do you find jobs plentiful these days?", though the share is still near record highs, The net labor differential narrowed a little... still positive, on net, but less so. Keep an eye on the jobless rate for January (due next week). Remember it fell 0.3 ppts to a 22-month low of 3.9% in December.

Buying plans

Still decent job prospects are allowing consumers to spend, or at least plan to. Plans to buy a home (both new and not new) were up (even with house prices near record-highs), along with plans to buy a major appliance and a car. Indeed, the longer these computer chips for cars take, the greater the plans to buy. So please... hurry it up.

Table 1 - United States — Consumer Confidence Index

(1985 = 100)

Source: BMO Economics, Haver Analytics