The U.S. Consumer Confidence Index by The Conference Board dropped 8.1 points in December, reaching 104.7, marking a decline compared to November, when Donald Trump won the elections.
Additionally, the Present Situation Index, based on consumers’ assessment of current business and labor market conditions, fell 1.2 points to 140.2, according to the report.
“While weaker consumer assessments of the present situation and expectations contributed to the decline, the expectations component experienced the most significant drop. Consumers’ views on current labor market conditions continued to improve, consistent with recent employment and unemployment data, but their assessment of business conditions weakened,” stated Dana M. Peterson, Chief Economist at The Conference Board.
On the other hand, the Expectations Index, which reflects consumers’ short-term outlook on income, business activity, and labor market conditions, fell 12.6 points to 81.1, just above the threshold of 80, which often signals a recession.
Compared to November, consumers in December were substantially less optimistic about business conditions and future income. Additionally, pessimism returned regarding future employment prospects after cautious optimism prevailed in October and November, Peterson added.
Adult Consumers Are the Most Pessimistic
Among age groups, the decline in confidence in December was led by consumers over 35 years old, while those younger than that range were more confident.
Among income groups, the drop was concentrated among consumers with household incomes between $25,000 and $100,000, while those in the lower and upper income brackets showed only limited changes in confidence. On a six-month moving average, consumers under 35 years old and those earning more than $100,000 remain the most confident.
In December, consumers were slightly less optimistic about the stock market: 52.9% expected stock prices to rise in the coming year, compared to 57.2% in November.
Similarly, 25% of consumers anticipated stock prices would fall, up from 21.7%. The proportion of consumers expecting higher interest rates over the next 12 months rose to 48.5%, but remained near recent lows.
The percentage of those expecting lower rates dropped to 29.3%, down from recent months but still relatively high, Peterson noted.
