The Conference Board’s Consumer Confidence slipped in December, disappointing forecasts. This was particularly surprising as the positive post-election euphoria and optimism for the future was expected to continue.
Both the Present Situation and Expectations Indexes fell. The Present Situation Index ticked down 1.2 points as consumers’ assessment of current business conditions weakened, and the Expectations Index dropped more dramatically, falling over twelve points to 81.1, which is just above the Conference Board’s 80.0 “recession” threshold (red dashed line on bottom graph below).
Despite the initial post-election rebound in confidence, consumers became more pessimistic in December about business and labor conditions moving forward. Additionally, the decrease in Confidence was reflected in consumer spending plans–specifically plans to purchase big-ticket items like appliances and electronics decreased. Also lower on the spending list were traveling, going to the movies, and vacation plans.
While only a single monthly data point, it is surprising that the post-election rebound in Consumer Confidence was not sustained. If consumer attitudes continue to sour and spending slows dramatically as a result, it would have a major impact on the stock market and economy in 2025.
