The Conference Board U.S. Consumer Confidence Index, a measure of how optimistic people are about the current and near-future economy, along with their willingness to spend money, fell sharply to 88.6 in December, reports the Associated Press.
The Conference Board released the numbers Tuesday morning, amidst news of a smaller-than-hoped-for stimulus bill, a mutated Covid-19 strain in the United Kingdom, and travel restrictions aiming to slow the spread of the mutated virus.
November’s Consumer Confidence reading was 92.9, adjusted downward from an original 96.1 reading. Pre-pandemic in February 2020, consumer confidence had reached 132.6, approaching May 2000’s record high of 144.7.
The drop this month was worse than analysts expected, according to the AP report, and could signal bad news for retailers, along with restaurants, gyms, and entertainment venues barely hanging by a thread this holiday season. Consumer spending accounts for 70% of U.S. economic activity.
Unexpected drop in Dec @Conferenceboard Consumer Confidence … headline at 88.6 vs. 97 est. & 92.9 in prior month (rev down from 96.1); Expectations at 87.5 vs. 84.3 prior (rev down) & Present Situation tanked to 90.3 vs. 105.9 prior … overall level still looking like a “W” pic.twitter.com/Zw9kffH8my
— Liz Ann Sonders (@LizAnnSonders) December 22, 2020
Only 16% of consumers polled believe business conditions are “good,” compared to 18.8% in November. Those claiming business conditions are “bad” increased from 34.8% to 39.5%. The pessimism was also notable in people’s views of the job market, with only 21.8% (down from 26.3%) saying jobs are “plentiful” and 22% saying jobs are “hard to get,” compared to 19.4% in November.
“Consumers’ assessment of current conditions deteriorated sharply in December, as the resurgence of COVID-19 remains a drag on confidence,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board in a press release Tuesday. “As a result, consumers’ vacation intentions, which had notably improved in October, have retreated… Overall, it appears that growth has weakened further in Q4, and consumers do not foresee the economy gaining any significant momentum in early 2021.”
In spite of successful vaccination roll-outs underway, the overall economic outlook seems more pessimistic than it has in months, with futures holding steady after a sharp decline Monday. Last week, the Commerce Department reported that retail sales fell 1.1% in November (seasonally adjusted), representing the biggest drop in seven months.
However, the press release from the Conference Board conveyed some optimism about short-term economic outlooks. Twenty-nine percent of consumers expect business conditions to improve over the next six months, versus 26.5 percent in November, the report found. The percentage of those expecting business conditions to worsen decreased by less than one point. It helps that businesses have been getting creative to keep up their profits.
More From GOBankingRates: