The consumer confidence index jumped to 113.7 from a revised 109.4 in November, the Conference Board said Tuesday.
U.S. stock markets have rallied sharply to record highs since the surprise election of Donald Trump in November on the assumption that his administration will be good for business. The economy is also much improved, with the unemployment tumbling below 5%.
“The post-election surge in optimism for the economy, jobs and income prospects, as well as for stock prices which reached a 13-year high, was most pronounced among older consumers,” said Lynn Franco, director of economic indicators at board.
A measure of how confident Americans feel right now, known as the present situation index, dipped to 126.1 from 132. That’s still near the highest level in nine years, however.
An index that tracks expectations over the next six months rose to 105.5 from 94.4, marking the highest level since 2003.
Consumer confidence hits highest level in 15 years
WASHINGTON — American consumers are the sunniest they’ve been in more than 15 years.
The Conference Board said Tuesday that its consumer confidence index climbed to 113.7 in December, up from 109.4 in November and the highest since it reached 114 in August 2001. It’s another sign consumers are confident in the aftermath of a divisive election campaign.
The index measures consumers’ assessment of current conditions, which dipped from November but was still very positive, and their expectations for the future, which hit a 13-year high.
Lynn Franco, director of economic indicators at the Conference Board, said the “post-election surge in optimism” was strongest among older Americans.
The U.S. economy grew at a 3.5 percent annual pace from July to September, fastest in two years. Unemployment is at a nine-year low of 4.6 percent. Employers have added 180,000 jobs a month this year, down from an average 229,000 in 2015 but still solid.
Economists monitor consumers’ mood closely because their spending accounts for about 70 percent of U.S. economic output.
“The election of Donald Trump has raised household expectations for the economy to a very high level,” Stephen Stanley, chief economist at Amherst Pierpont Securities, wrote in a research note. “It remains to be seen whether Trump can deliver,” but the burst in confidence could drive consumer spending higher.
To Chris G. Christopher Jr., director of consumer economics at IHS Global Insight, was upbeat about the report’s timing: “Consumer confidence ended 2016 on a high note just in time to help out in the final leg of this year’s holiday retail sales. Consumer mood brightened after the presidential election, indicating that many Americans are entering the New Year in a very cheerful mood.”
Consumer confidence surges in December
The Conference Board said Tuesday its consumer confidence index increased to 113.7 in December from an upwardly revised 109.4 in November.
“The post-election surge in optimism for the economy, jobs and income prospects, as well as for stock prices which reached a 13-year high, was most pronounced among older consumers,” said Lynn Franco, director of economic indicators at the Conference Board, a nonprofit business research organization.
Much of the confidence boost came from expectations that short-term economic conditions will improve. The Expectations Index, which measures consumers' outlook for the next six months, rose sharply from 94.4 in November to 105.5, a 13-year high.
Consumers who expect business conditions to improve in the next six months increased to 23.6% from 16.4%. Those expecting business conditions to worsen declined from 9.9% to 8.7%.
But consumers’ assessment of current conditions declined in December. The Present Situation Index fell to 126.1 from 132.0 in November. Consumers who said business conditions are “good” fell to 29.2% from 29.7%. Those saying business conditions are “bad” increased to 17.3% from 15.2%.
Consumers generally remain optimistic about labor market strength. Those expecting more jobs in the coming months increased from 16.1% to 21%. But those expecting fewer jobs also rose to 14% from 13.5%.
Consumers also expect their incomes to continue to grow. The percentage of consumers expecting rising incomes increased to 21% from 17.4% in November. Consumers expecting a cut in their incomes declined to 8.6% from 9.2%.