US consumer confidence stirs from doldrums


WASHINGTON: US consumers had little to cheer about in December’s holiday season as jobs remain scarce, a widely watched survey showed Tuesday, suggesting household spending could remain slack in early 2010.The Conference Board said its consumer confidence index rose modestly for the second straight month in December, to 52.9 from an upwardly revised 50.6 in November.

The reading was a shade below the 53.0 expected by most analysts; the private research firm initially reported the November index at 49.5.

The entire improvement in the confidence index to a two-year high came from rising hopes for better economic conditions over the next six months, offsetting a grimmer view of current conditions, the New York-based firm said.

“A more optimistic outlook for business and labour market conditions was the driving force behind the increase in the expectations index,” said Lynn Franco, research director at The Conference Board.

“Regarding income, however, consumers remain rather pessimistic about their short-term prospects and this will likely continue to play a key role in spending decisions in early 2010.”

The December “present situation” sub-index dropped to the lowest level since February 1983, to 18.8 from 21.2 in November.

“Barring a New Year’s miracle in the labor markets it will be an enormous challenge to maintain forward momentum on real consumer spending early next year,” said Brian Bethune, chief US financial economist at IHS Global Insight.

The Conference Board’s consumer confidence index was based on a survey of 5,000 households that ended Dec 21, just four days before Christmas.

Respondents seeing “jobs plentiful” fell to 2.9 from 3.1 in November, while those viewing “jobs not so plentiful” rose to 48.5 from 47.7.

Joel Naroff of Naroff Economic Advisors said the declining current conditions index “can only be found with the Hubble telescope.

“I guess all those comments about the recession being over have not made much of a dent in household psyches,” he said, amid unemployment at its highest level in 26 years.

The jobless rate dipped to 10 per cent in November and weekly initial unemployment claims have been declining, but “the index suggests that consumers do not believe the labor data and feel the employment situation is not stabilizing,” analysts said in a client note.

The “expectations” sub-index, which measures confidence over the next six months, rose to 75.6 from 70.3, the highest level since December 2007, when the world’s largest economy entered recession.

Growth resumed in the third quarter this year after a year of contraction, but at an anemic pace of 2.2 per cent, and economists say the recovery will be slow, with unemployment expected to remain elevated even as activity picks up.

Consumer spending, which drives two-thirds of US economic output, rose a half per centage point in November, according to the latest official data.

Early retail reports on the Christmas shopping season show an improvement from the disastrous December 2008 sales as the global financial crisis went into overdrive.

The weekly chain store sales index released Tuesday by the International Council of Shopping Centres and Goldman Sachs revealed a 2.3 per cent year-on-year increase in the week ending December 26.

A holiday retail spending report from MasterCard Advisors Spending Pulse

the day before showed sales rose 3.6 per cent from a year ago.

There was a fresh sign of stabilisation in the troubled housing sector at the epicentre of the worst economic slump in decades.

The Standard Poor’s/Case-Shiller index on home prices in the 20 largest US cities fell 7.3 per cent in October from a year ago, slowing from a price plunge earlier this year but relatively flat on a month-to-month basis. — AFP