Inflation, Omicron Fears Weigh on U.S. Consumer Confidence in January
By Xavier Fontdegloria
Consumer confidence in the U.S. deteriorated slightly at the
beginning of the year as the increase in Covid-19 cases due to the
spread of the Omicron variant and broad inflation pressures dimmed
the outlook for the economy.
The Conference Board's consumer confidence index decreased to
113.8 in January from a revised 115.2 in December, data released
Tuesday showed. The decline in confidence follows three consecutive
months of gains.
Economists polled by The Wall Street Journal had forecast the
index--which is based on an online survey of consumers--to decline
Consumers turned slightly more pessimistic as their short-term
expectations weakened, pointing to a likely moderation in economic
growth during the first quarter of 2022, said Lynn Franco, The
Conference Board's senior director of economic indicators.
The expectations index--which gauges short-term outlook for
income, business and labor-market conditions--fell to 90.8 from
95.4, the report said.
However, the present situation index, which reflects consumers'
assessment of current business and labor-market conditions,
increased to 148.2 in January from 144.8 the prior month. The
measure suggests that the economy entered the new year on solid
footing, Ms. Franco said.
Consumer confidence hints at Americans' willingness to spend on
goods and services, a major driver of the U.S. economy. However,
the correlation between confidence and spending has weakened during
the Covid-19 pandemic as stimulus spurred households to keep
buying, economists say.
"Consumers are still spending even though consumer confidence
may suggest otherwise," Affinity Solutions Chief Executive Jonathan
Silver said. Data from the firm, which monitors credit and debit
card transactions, show that spending in December increased 16.5%
The Conference Board's survey for January showed that the
proportion of consumers planning to purchase homes, automobiles and
major appliances over the next six months all increased.
Neither the Omicron variant nor high inflation appear to be
causing a significant pullback in consumer spending, but inflation
has the potential to slow momentum if left unchecked, Mr. Silver
Concerns about inflation declined somewhat but remained
elevated, while fears due to the pandemic increased slightly amid
the surge in Covid-19 cases over the month, The Conference Board
"Looking ahead, both confidence and consumer spending may
continue to be challenged by rising prices and the ongoing
pandemic," Ms. Franco said.
Write to Xavier Fontdegloria at firstname.lastname@example.org
(END) Dow Jones Newswires
January 25, 2022 10:38 ET (15:38 GMT)
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