US consumer confidence edges past forecasts in January, Conference Board says
By Alexander Bueso
Date: Tuesday 26 Jan 2021
(Sharecast News) - Consumer sentiment in the US was buoyed by gains in the stock market and federal stimulus checks at the start of 2020.
The Conference Board's consumer confidence index for January edged past economists' forecasts, printing at 89.3, up from 87.1 for the month before (consensus: 87.0).
Yet whereas a sub-index for Americans' expectations strengthened by 5.5 points, buoying the headline index, that which tracks their assessment of current economic conditions dipped by 2.8 points.
Ian Shepherdson at Pantheon Macroeconomics attributed the bulk of the gains in the former to gains in the stock market, although he conceded that Washington's one-off $600 stimulus payments for Americans and extended unemployment likely also helped.
The present situation sub-index on the other hand was likely held back by rising joblessness due to the pandemic.
Even so, Shepherdson sounded an upbeat note - at least as far as the outlook for household consumption was concerned.
"The expectations index right now is about 10 points below its pre-Covid trend, but it is high enough to suggest that if consumers were able to spend on services, they would. We remain of the view that the post-Covid surge in spending will be of unprecedented proportions.
"Finally, note that 12-month inflation expectations dipped to 5.8% from 6.0%, well below the pandemic peak, 6.6% in June. We're not surprised the measure has dropped, given the fading of the jump in food prices triggered by the start of the pandemic, but it doesn't tell us anything about inflation risk in the coming post-Covid world."
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