US Consumer Confidence Index Plunges to 7-Year Low

The US consumer confidence index declined sharply in December, plunging to a seven-year low as consumers became increasingly pessimistic about their businesses and economic prospects. The Conference Board reported that the overall index dropped by 8.1 points to 104.7.

According to the report, only 19.1 per cent of respondents said business conditions were good, down from 21.6 per cent in November, while 16.7 per cent said business conditions were bad, up from 15.3 per cent last month.

However, consumers' assessments of the labour market improved slightly, with 37 per cent saying jobs are 'plentiful', and only 14.8 per cent saying they are 'hard to get'.

Weaker consumer confidence in December was attributed to weakened appraisals of present situation and expectations, which contributed to a drop in overall consumer optimism. Consumers were also substantially less optimistic about future business conditions and incomes.

The decrease in consumer outlook over the past six months was evident in both labour market and income prospects. Fewer consumers expected increased job availability (19.1 per cent) compared to November (22.8 per cent), while increases in incomes are now expected by only 17.2 per cent, compared to 20.7 per cent last month.

"This sharp decline is a significant warning sign of an impending economic downturn," said an economist at a major financial institution. "Consumers' diminished expectations and increasing pessimism are likely to have far-reaching implications for the US economy."

The Conference Board's Consumer Confidence Index now exceeds the threshold of 80, which typically signals a recession ahead.

However, despite concerns about inflation (which saw a 14% increase last week) the average 12-month inflation rate stabilized at 5 percent.

Fibre2Fashion News Desk (DS)