Consumer confidence fell to 113.8 in January from 115.2 (revised down from 115.8). The slight decline reflects the impact of the rapid spread of the Omicron Covid-19 variant in the US over the past few weeks, but remains significantly above previous pandemic lows in the 80 region and confirms the Fed’s view that the economy is becoming more resilient. Consumer confidence fell for the first time in four months in January, but the decline was smaller than expected. Consumers are becoming pessimistic about their outlook on the economy and their own income, even if they acknowledge that business conditions have improved. But when asked about the current situation, consumers are just as optimistic as they have been since August.
If we look at the sub-items; The current situation index, based on consumers’ assessment of current business and labor market conditions, rose from 144.8 to 148.2. Consumers’ expectations index based on the short-term outlook for income, job and labor market conditions decreased from 95.4 to 90.8. However, the percentage of consumers planning to buy houses, cars and white goods in the next six months has increased. Meanwhile, concerns about inflation fell for the second month in a row but remained high after hitting a 13-year high in November 2021. The University of Michigan confidence index for January decreased to 68.8, we have been watching below the level of 80 since July 2021 in that item.
The economy showed that it entered the new year on a solid foundation. However, short-term growth prospects weakened, pointing to a possible moderation in growth in 1Q22. Amid the ongoing Omicron surge, concerns about the pandemic have risen slightly. Looking ahead, both confidence and consumer spending may continue to be strained by rising prices and the ongoing pandemic. We hope the Fed clarifies the path and strategy tomorrow, while we’ll see if it confirms increasingly aggressive expectations. We anticipate that they will not cause a sharp transition that causes demand shock as they move from the tightening path.
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Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı