While President Obama’s economic approval rating has gone up in the past week, American consumers seemed to be somewhat less optimistic about the economy itself—well, some American consumers, anyway.
The Consumer Confidence Index, released monthly by the Conference Board, fell slightly in January to 61.1 from 64.8 in December. The survey showed that consumers are most worried about the current business environment.
“Consumer Confidence retreated in January, after large back-to-back gains in the final two months of 2011,” said Lynn Franco, director of the Conference Board Consumer Research Center. “Consumers’ assessment of current business and labor market conditions turned more downbeat and is back to November 2011 levels.”
But not everyone agrees with the Conference Board. Another reputable consumer survey by Thomson Reuters/University of Michigan said just the opposite last week — that consumer sentiment in January rose to 75 from 69.9 in December.
“Although the current level of confidence has nearly regained its highest level since the recession, this is the third consecutive year that confidence has mounted a comparable rally,” said Richard Curtin, chief economist at Surveys of Consumers, in a release.
Curtin pointed out that the positive numbers might only stay positive if consumers see some significant improvement in the coming months.
“All prior rallies failed when consumers concluded that the improvement they had anticipated had failed to materialize,” Curtin said. “The recent gains in confidence are now critically dependent on continued job gains.”
So there’s one point on which the surveys agree.
Here’s another: According to both surveys, more people believe there will be more jobs in the U.S. this year. But those same people are not expecting any improvement in their personal financial situations.
Adolfo Laurenti, deputy chief economist at Mesirow Financial, says the fact that no one seems to agree on how confident we should really be—is no surprise.
“There is just a lot of uncertainty about the state of the economy, and that’s being reflected in a variety of different [surveys] we get,” Laurenti said. “People are getting more confident as they see things improving from last year… But we still have a lot of challenges.”
Those challenges will likely keep consumer confidence flat, or only slightly improving, as the economy continues its dreadfully slow, yet steady, growth.
Laurenti pointed to last week’s “sobering” outlook by the Fed as it forecasted near-zero short-term interest rates through 2014, unimpressive fourth-quarter GDP growth, Europe’s problems and an artificial decline in unemployment (he says the numbers have gone down because people have simply stopped looking) as reasons not to get our hopes up for a confidence boost any time soon.
“It probably will continue to improve very gradually,” he said. “But the point is that we don’t have enough momentum.”
The bottom line?
Americans do not forgive and forget. Until there is a concrete, convincing and long-lasting boost to the economy (like lots of jobs) don’t expect to see this anytime soon:
For further reading — Lower consumer confidence could be the reason Americans are saving more.
File images courtesy of Ambro and 89studio, freedigitalphotos.net