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  • The Key Takeaways From December Consumer Confidence Data

The Key Takeaways From December Consumer Confidence Data

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Bloomberg Dec 24 05:16 · 8759 Views

The Conference Board Chief Economist Dana Peterson discusses the decrease in US consumer confidence in December. The Conference Board’s gauge of confidence decreased to 104.7, led by consumers over 35 years old. That was well below the median estimate in a Bloomberg survey of economists.

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Transcript

  • 00:00 We learned today as well, Alex, that U.S.
  • 00:01 consumer confidence dropped to a 5 month low in December, driven by concerns over the economy and potential Trump policies.
  • 00:08 In a survey by the Conference Board, 46% of respondents expected tariffs to raise their cost of living.
  • 00:14 Joining us now to discuss is the researcher behind the report, Dana Peterson, chief economist at the Conference Board.
  • 00:19 So Dana, I mentioned those numbers.
  • 00:21 Present situation was fine.
  • 00:23 It came in at 140.2, just a little bit down from 140.9 the previous month.
  • 00:27 But expectations were down almost
  • 00:30 11 points,
  • 00:31 down from 92.3 to 81.1.
  • 00:34 How concerned should we be?
  • 00:36 Well, certainly the present situation, as you said, was only a tick downward.
  • 00:41 But the expectations really fell backward after several months of improvement and it was across
  • 00:46 all three components of that.
  • 00:47 That's business conditions,
  • 00:49 what they think about employment six months ahead and also incomes.
  • 00:54 Was that
  • 00:55 shown on party lines at all?
  • 00:57 I'm just wondering because a lot of it was led by the tariff
  • 01:01 increase expectation, right?
  • 01:04 Well, we did ask a special question about what consumers are thinking about in terms of policy for next year.
  • 01:10 And certainly many of them are concerned about tariffs and whether or not tariffs are going to be
  • 01:15 inflationary or not.
  • 01:16 And indeed,
  • 01:17 in the right ends where we ask consumers what's the most important thing that you think will impact the economy, good or bad?
  • 01:24 Certainly prices left up
  • 01:26 inflation to the top.
  • 01:28 But also not long at not far after that were certainly elections presidents.
  • 01:32 And also
  • 01:33 the word tariff actually surged from zero to something notably positive.
  • 01:38 So consumers are paying attention to what's going on in politics,
  • 01:41 and they're starting at least they're curious to know what that's going to mean for their bottom lines.
  • 01:46 Yeah.
  • 01:46 I mean, it's more fodder for the Federal Reserve, right, to continue to focus on inflation or to refocus on inflation again, as
  • 01:53 opposed opposed to the unemployment part of the mandate, which it looked like they had been
  • 01:58 at least swerving towards.
  • 02:00 Well, it seems like it is something that FOMC participants, at least some of them, according to Chair Powell,
  • 02:06 are looking at and did fold in their expectations of what policy might look like next year and the impacts on the consumer.
  • 02:13 Certainly we have the debt ceiling rolling around.
  • 02:16 We have the tax Cliff of 2026.
  • 02:19 That's going to need to be dealt with.
  • 02:20 And certainly there are the threats of
  • 02:23 renewed or at least
  • 02:25 intensified trading, trading wars, trade wars, because certainly the towers that were put in place years ago were never lifted.
  • 02:31 And we could see more.
  • 02:33 That, again, will impact consumers because companies that have to pay those tariffs here in the US are just going to pass on those costs
  • 02:40 to the consumer.
  • 02:42 That's sort of also my question on that is that
  • 02:45 this data
  • 02:46 was very different from the rest of the surveys that we've gotten on the consumer.
  • 02:50 And I'm wondering why you think
  • 02:52 that's different and why the feeling then that maybe the tariffs will get passed on to the consumers.
  • 02:56 I'm thinking about Umich,
  • 02:58 for example.
  • 02:58 There was some stockpiling and sort of buying now and not later because of tariffs.
  • 03:02 But what did you make of the negativity in your report versus other surveys?
  • 03:07 Well, I mean, again, just looking at the headline,
  • 03:09 it's made-up of five different indicators,
  • 03:12 2 are about business, 2 are about the employment
  • 03:16 situation now and in the future and the other ones about income.
  • 03:19 So when you put all those things together, as I mentioned, business, employment
  • 03:23 and income, we're down.
  • 03:24 But
  • 03:25 the index itself does not reflect anything about politics.
  • 03:29 So we're understanding the thoughts
  • 03:31 that consumers are interested or and some of them are concerned from our special question that we asked and also from the write insurance,
  • 03:39 which we usually do a report on.
  • 03:40 So,
  • 03:41 you know, all the write insurance were were pretty mixed.
  • 03:44 Some said that they are excited about what's going to happen next year, others weren't.
  • 03:48 But certainly I think consumers who've just experienced
  • 03:51 a lot of inflation and prices are certainly much higher now than they were before the pandemic
  • 03:57 are focused on inflation.
  • 03:59 And certainly the risks around that
  • 04:02 come from things that are already putting upward pressure on inflation, including insurance,
  • 04:07 labor costs from labor shortages.
  • 04:10 Also, housing costs aren't falling as fast as we want, but there's also potential for some things that might be inflationary
  • 04:16 in 2025, and they're all focused on that right now.
  • 04:19 Just briefly, Dana, what did you make of the rest of the data out today?
  • 04:21 We had new home sales for November, not as good as anticipated, but still higher.
  • 04:26 Yeah.
  • 04:27 So actually when we asked consumers about whether or not they're going to purchase homes, we've
  • 04:31 we've seen a little bit of an improvement
  • 04:33 over the last six months, but it's still pretty low.
  • 04:36 But the good news is that despite the fact that consumers are concerned or worried or thinking about the next year, they still plan to buy.
  • 04:43 They're still planning on buying cars, especially used cars, but also new cars.
  • 04:47 They're
  • 04:48 planning on going on vacation a little bit less, but if they go on vacation, they're looking to go on international vacations.
  • 04:55 And when it comes to services, they're still looking at experiential services like
  • 04:59 going to the.
  • 05:00 Movies or
  • 05:01 streaming or going to hotels and restaurants
  • 05:04 and that sort of thing.
  • 05:05 So despite whatever they're worried about,
  • 05:07 consumers still think that right now it's easy to find a job.
  • 05:10 And as long as they are working, we think that they're going to continue to spend.
  • 05:14 And
  • 05:15 potentially that spending will lean against some of the downside risks that we see for next year.
  • 05:20 All
  • 05:21 right, Dana, thanks a lot.
  • 05:22 Really appreciate it.
  • 05:22 Dana Peterson, chief economist at the Conference Board.