NEW YORK (AP) — Consumer confidence fell in January after two straight months of big gains because Americans were less optimistic about their incomes, a private research group reported.
The Conference Board says Tuesday that its Consumer Confidence Index is at 61.1, down from a revised 64.8 in December. The fall comes after the index had surged by more than 20 points last month from 40.9 in October amid growing signs of an improving economy. A reading of 90 indicates a healthy economy, a level it hasn’t approached since the recession began in 2007.
Economists watch the confidence numbers closely because consumers’ spending accounts for about 70 percent of U.S. economic activity. The current reading indicates that consumers’ confidence is beginning to wane a bit.
One gauge of the index, which measures how shoppers feel now about the economy, declined to 38.4 from 46.5. The other gauge, which measures shoppers’ outlook over the next six months, edged down to 76.2 from 77 in December.
“Consumers’ assessment of current business and labor market conditions turned more downbeat,” said Lynn Franco, director of The Conference Board Consumer Research Center in a statement.
Franco noted that recent increases in gasoline prices may have consumers’ feeling “a little less confident this month.” Indeed, gas prices rose by a penny on Monday to $3.43 per gallon, according to the AAA, Wright Express and Oil Price Information Service. A gallon of regular is 15.3 cents higher than it was a month ago and 33 cents higher than it was last year.
Americans have other reasons to be cautiously optimistic. The jobless rate is at the lowest level in nearly three years, but it’s still at a high 8.5 percent. Economists predict that 155,000 more net jobs were created in January, but the unemployment rate is expected to be the same. The government releases the job figures for January Friday.
And consumers are still worried about the higher costs they’re paying for household basics and the weak housing market. U.S. home prices fell for a third straight month in nearly all cities tracked by a major index. Prices dropped in November from October in 19 of the 20 cities tracked, according to the Standard & Poor’s/Case-Shiller home-price index released Tuesday
As a result, Americans tempered their enthusiasm for the future. Over the next six months, consumers were more upbeat about employment, but less so about business conditions and their income prospects.
Those expecting more jobs in the months ahead increased to 16.2 percent from 14.0 percent. The proportion of consumers expecting an increase in their incomes declined to 13.8 percent from 16.3 percent. Meanwhile, the proportion of consumers’ anticipating business conditions to improve over the next six months declined to 16.6 percent from 16.8 percent.
The Consumer Confidence index, which was based on a survey of shoppers conducted from Jan. 1 through Jan. 19, showed those concerns.