Here’s why consumer confidence dipped in December
Here’s why consumer confidence dipped in December
Economic indicators are a little sparse in the final days of the year, but but we did get one update Monday morning: consumer confidence. It had been on the rise and it was expected to go up again. But The Conference Board, which releases the Consumer Confidence Index every month, said it fell by 7% in December.
Consumers aren’t necessarily feeling bad about the economy. What’s important here is they feel worse than last month.
“It is pretty notable, especially after several months of improvement, and then in one month, we have a big dip down,” said Dana M. Peterson, chief economist with The Conference Board.
She said the consumers in the survey also note which factors they think are most impacting the economy. For the past few months, “consumers continue to point to elections, president, White House,” she said. “And also there was a spike in the number noting tariffs.”
Tariffs are something that almost no respondents mentioned in recent months. That could be partly why in December, inflation actually beat out politics on the list of influencers.
“Consumers are expecting that the impact on their costs will be higher,” said Kayla Bruun, the lead economist at Morning Consult. And she said even if prices aren’t rising that fast anymore, everyone’s still annoyed with the fact that most prices have stayed high.
“I think it’s something consumers are very primed to be upset about, very sensitive to anything that’s going to add inflation risk,” she said.
And there is one demographic that seems to be most upset, said Michael Green, chief strategist at Simplify Asset Management: “Basically, the older you were, the less confident you became in this environment.”
Green said that’s significant because typically the 55-and-older crowd is more confident about the economy than less-financially stable younger people.
“Now I’m suddenly looking at a situation as an older person where my income is starting to be cut by the Federal Reserve cutting interest rates,” he said.
And now that those interest rates are falling, older people who rely on interest from retirement investments are most likely to bring that confidence number down.
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