U.S. Consumer Confidence Reaches Two-Year High

By Ed Frankl

U.S. consumer confidence climbed to its highest level since December 2021, rising for a third-straight month, as inflation continues to trend downward, hopes of interest-rate cuts rise and recession fears abated.

Private research group The Conference Board said Tuesday that its consumer-confidence index climbed to 114.8 in January from a downwardly revised 108.0 in December. Economists had expected the index to tick up a little more, to 115.0, according to a Wall Street Journal poll.

"January's increase in consumer confidence likely reflected slower inflation, anticipation of lower interest rates ahead, and generally favorable employment conditions as companies continue to hoard labor," The Conference Board Chief Economist Dana Peterson, said.

Inflation has been cooling for most of the last year, though official data said it actually crept up to 3.4% in December, from 3.1% in November. Nevertheless, average 12-month inflation expectations fell to 5.2%, the lowest since March 2020, while expectations that interest rates will rise in the year ahead also plummeted, The Conference Board said.

Improvements were seen across all age groups, with the largest rise for consumers 55 and over, while confidence rose for all income groups except the top income earnings of $125,000 or more, which dipped slightly. Expectations of a recession also subsided, the survey said.

Meanwhile, the survey's measure for consumers' present situation brightened markedly, to 161.3 in January from 147.2 last month, buoyed by more positive views of business conditions and the employment situation, Peterson added.

Write to Ed Frankl at [e-mail]

(END) Dow Jones Newswires

01-30-24 1042ET