Consumer confidence declined in January after a slight gain in December, according to business research group the Conference Board.
The Conference Board’s consumer confidence index is at 87.9 for January, down from 90.6 in December.
“The modest improvement in consumer confidence last month was short-lived,” said Lynn Franco, director of the Conference Board’s consumer research center.
“The meltdown in the housing sector and the spillover into the financial markets has taken a toll on consumer confidence,” she said.
Franco said, moving forward consumers are quite downbeat about the short-term future and a greater proportion expect business conditions and employment to deteriorate further in the months ahead.
Another short-run warning for home builders: Franco said the percentage of consumers anticipating an improvement in their earnings has declined and could potentially impact spending decisions.
Consumers’ appraisal of current conditions is not favorable. Those claiming business conditions are “bad” rose to 20 percent from 18.8 percent, while those claiming business conditions are “good” decreased to 20.7 percent from 21.2 percent.
On a more positive note, Brian Bethune, director of financial economics at research group Global Insight, said while consumer confidence is down, it’s not pointing to a sharp drop that would lead to a recession. He said the index would have to be below 80 to indicate a recession.
