Consumer Confidence Improves with New Year

Consumers' view of both their current situation and future expectations improved strongly in January, with the current index up 6.1 points to 31.0 and the expectations index lifting 8.1 points to 80.3.

Consumer confidence improved with the beginning of the 2011, raising hopes for a better year ahead. The January reading of the Conference Board Index of Consumer Confidence Index indicated a sharp improvement in confidence, with the index rising 7.3 points to 60.6. This returns the index to a level last seen in May 2010, before the economy hit a soft patch in the second and third quarters.

Conference Board noted that consumers expressed greater confidence that the economy will continue to expand and generate more jobs in the months ahead. Income expectations are also more positive.

Consumers' appraisal of business conditions picked up, with those anticipating an improvement over the next six months increasing 2.2 percent to 19 percent, while there was a slight decline (down 0.5 percent to 11.3 percent) in those expecting business conditions to worsen. Similarly, consumers' assessment of the job market improved.

Those claiming jobs are plentiful rose 1 percent to 5.2 percent, while those claiming jobs are hard to get declined 2.6 percent to 43.4 percent. Income expectations also moved in the right direction, with those anticipating an increase in income over the next 6 months up 1.5 percent to 11.4 percent and those expecting a decrease down 1.6 percent to 15.3 percent.

Confidence in the housing market also strengthened in January, with 2.2 percent of respondents indicating that they were planning to buy a home in the next six months - up from 1.9 percent in December. There was also a slight improvement in those considering buying a new home in January, up to 0.4 percent of respondents from 0.3 percent in December.

- Courtesy of NAHB