Consumer Confidence Rises, Ends Year On A High Note
Consumer confidence rose in December, while November was revised upward, as consumers ended the year on a strong note and well-positioned entering 2022, The Conference Board reported on December 22. The organization’s Consumer Confidence Index is now at 115.8, up from a revised 111.9 in November. The Present Situation Index—which measures consumers’ view of the current economy—edged down slightly to 144.1 from 144.4 last month. The Expectations Index – a forward-looking view of how consumers view the short-term economic outlook – rose to 96.9 from 90.2.
"Consumer confidence improved further in December, following a very modest gain in November,” said Lynn Franco, senior director of economic indicators at the board, said in a statement. “The Present Situation Index dipped slightly but remains very high, suggesting the economy has maintained its momentum in the final month of 2021. Expectations about short-term growth prospects improved, setting the stage for continued growth in early 2022. The proportion of consumers planning to purchase homes, automobiles, major appliances, and vacations over the next six months all increased.”
Franco added that consumer worries about inflation declined after hitting a 13-year high in November, along with concerns about COVID-19. That comes as the omicron variant of the virus spreads rapidly in the country and inflation continues to track at levels not seen since the early 1990s. “Looking ahead to 2022, both confidence and consumer spending will continue to face headwinds from rising prices and an expected winter surge of the pandemic,” Franco said.
The report augurs well for 2022, as economists expect growth to slow from 2021’s pace with federal stimulus winding down and the Federal Reserve set to trim its support for the economy and raise interest rates thereafter.
Meanwhile, house sales remain strong, with sales of existing homes rising 1.9% in November to an annual pace of 6.46 million. That is a pace slightly below that of a year ago, but still robust. The median price of homes sold during November reached $353,900, a 13.9% gain from 2020.
“The prospect of higher interest rates in 2022 is accelerating the buying decision for buyers in an otherwise slower season,” George Ratiu, manager of economic research at Realtor.com, said in a statement. “However, the low number of homes for sale remains the principal challenge, stumping both existing homeowners looking for their next house and first-time buyers seeking a place to call their own. There are fewer than half as many homes on the market now compared with two years ago.”
Source: USNews, 12.22.2021
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