The closely watched Conference Board assessment of consumer confidence is out for December, and it shows a drop from the level measured the month before. However, it is in line with results of December 2009, and CB says indicators point to continued modest overall economic growth in 2011.
The baseline Conference Board Consumer Confidence Index® number stood at 54.3 in November, and slipped to 52.5 in the current reading. A reading of 100 indicates where the level of confidence was in 1985.
Expectations are also down, although they are optimistic compared to the overall confidence score. Expectations stood at 73.6 in November, while the current reading has slipped to 71.9.
CB Director of the Consumer Research Center Lynn Franco said, “Despite this month’s modest decline, consumer confidence is no worse off today than it was a year ago. Consumers’ assessment of the current state of the economy and labor market remains tepid, and their outlook remains cautious. Thus, all signs continue to suggest that the economic expansion will continue well into 2011, but that the pace of growth will remain moderate.”
7.5% of those surveyed think current business conditions are good, down from 8.5% a month ago, but on the plus side, only 41.2% think conditions are bad, an improvement over the 42.9% of respondents who thought that in November.
The results reflected continuing sluggishness in the employment situation. In November, a paltry 4.3% said jobs are plentiful, but even fewer — 3.9% — agreed with that assessment in December. Meanwhile, 46.3% thought jobs were hard to get in November, and that number increased to 46.8% in December.
RBR-TVBR observation: The opinions of average citizens are meaningful in that they indicate how willing they will be to spend their hard-earned cash on goods and services and in so doing fuel economic growth, rather than feed into ongoing stagnation by saving it or using it to pay down debt.
There’s a circle in play here, and it can be vicious or not. Positively, if citizens are confident about their employment, they will be confident enough to consume, and that gives businesses both the motivation and the means to create more jobs. It gets vicious when consumers are worried about their jobs, and are reluctant to consume. That forces businesses to conserve their resources as well, and puts a natural lid on hiring, further fueling employment worries.
It’s like the economy is trying to pull a huge load with an insufficiently-powered engine. But the engine does seem to be out of the station and is moving forward. That, ladies and gentlemen, is the right direction. At some point, if not stopped in its tracks by another economic calamity, it will reach critical mass and generate its own sustainable momentum. Of course, we’d all like to see that sooner rather than later!
