The Conference Board released a report on Tuesday showing a consistent improvement in American consumer confidence throughout January.
According to the report, the consumer confidence index rose from a downwardly revised reading of 108.0 in December to 114.8 in January. Surveyed economists were expecting the index to rise to 114.0 from the originally reported 110.7 in December. This increase is the third in a row, and it raises the index to its highest level since December 2021.
Dana Peterson, Chief Economist at The Conference Board, suggests that this spike in consumer confidence may be due to a slowdown in inflation, lower expected interest rates, and an overall favorable job market due to the continued labor accumulation by companies.
The report also shows that the present situation index rose to 161.3 in January from 147.2 in December, influenced by more positive views on business and employment conditions.
Moreover, the expectations index, which reflects shifts in pessimism about future business, labor market, and income prospects, increased from 81.9 in December to 83.8 in January.
However, Peterson highlighted that despite the decrease in inflation expectations to a three-year low, consumers keep worrying about increasing prices. "Consumer buying plans decreased in January. However, they remain positive about their income and personal finances both in the present and in the next six months," Peterson added.
Later this week, the University of Michigan is set to report on consumer sentiment in January. The consumer sentiment index is anticipated to match its preliminary reading of 78.8, which marked a significant increase from the 69.7 reported in December.
