The monthly consumer confidence index report for December will be coming out today from the Conference Board. Today’s report will mark the US economic performance for the final month of the year 2019.
Economists are hopeful that the consumer confidence index will rise to 128.0. In October, the figure fell to 125.5. If the index comes in at the expected 128.0, this will mark an increase for the first time for the past four months.
After deteriorating slightly in November, the expectations are for a rebound. There is a good chance that we will see a modest improvement from the declines in November. Given the fact that consumers spend more during the holiday months, the forecasts remain consistent.
Further to the above, the fact that the payrolls saw a big jump in November is another contributing factor. Payrolls rose 266,000 during the month, marking a return to the 200k+ figure after four months.
While wage growth was weak, it was relatively stable. Considering the fact that the consumer prices remain sluggish, it translates to relatively better spending power for the consumers.
Will Jobs and China Relations Add to the Bump?
The overall economy was relatively stable. However, it was closer to the latter part of December that the United States and China agreed to the phase one deal. The initial part of the month saw a lot of doubts being cast.
However, closer to the December 15th deadline, both parties agreed to a trade deal. The result was that the US equity markets soared to fresh highs.
With the trade tensions easing at least for now, and the November jobs report, it is quite likely that the CB Consumer confidence index will rise from the November levels.
One of the reasons for this bullish view is the Federal Reserve. Given the fact that the US economy turned sluggish, the Fed responded with three rate cuts over the year. At the December meeting, Fed officials pledged to keep interest rates steady over the course of the year ahead.
This could translate to a sense of stability among consumers. One aspect is that the housing markets are showing signs of a rebound. Although still nascent, recent data on housing shows a pick up in sales.
With mortgage rates likely to stay low, US consumers are likely to see more spending power in their hands. Although the economy is still not fully out of the woods, the initial response looks quite encouraging.
One of the aspects to look out for is the Conference Board’s present situation index. In November, this component fell from 173.5 to 166.9 during the month. But the report from November indicates a positive outlook.
Consumer Confidence Still Remains High
Despite the monthly declines, the overall outlook for the consumer confidence index remains on a firm footing. This is seen from November’s outlook which showed that holiday spending will likely keep consumer optimism alive.
Respondents to the survey suggested that the economic growth into the final quarter of 2019 will remain weak. This is somewhat in line with the forward-looking indicators.
For example, the current GDP trackers suggest that US growth will average around 2% or more in the fourth quarter of 2019. Comparing to the third quarter, the expectations are for a pick up in the economy, albeit at a slower pace.
Today’s consumer confidence report comes ahead of the January 1st bank holiday in most of the major markets. Therefore, investors aren’t likely to read much into the numbers.