Despite Weaker Spending Consumer Confidence Is Strong

Consumer spending may not be that strong but consumer confidence is solid, at 98.1 in January and more than 2 points over the Econoday consensus. The assessment of the current jobs market is favorable with only 23.4 percent describing jobs as hard to get. This is a low percentage for this reading and down more than 1 percentage point from December. But improvement here is offset by a dip in those describing jobs as currently plentiful, down 1.4 percentage points to 22.8 percent. The mix of job readings as well as little change in the description of business conditions made for no change in the present situation component, at 116.4 for both December and January.

Confidence is less striking on the expectations side of the report where the component nevertheless is up nearly 3 points to 85.9. Confidence in the outlook for income is solid with optimists out in front of pessimists by 18.1 vs 10.8 percent which is wide for this reading. There's also a bit less pessimism over the jobs outlook though more still see fewer jobs opening up than those who see more jobs ahead, at 16.5 vs 13.2 percent.

Buying plans are positive with autos, homes, and appliances all gaining. Expectations for interest rates, in a reflection of Federal Reserve policy, have been increasing noticeably with an outsized 72.4 percent of the sample seeing gains ahead. For the stock market, fewer see increases ahead and more see selling but the results are muted compared to the volatility the stock market is currently suffering.

This report, in fact, is a testament to the strength of the U.S. consumer who so far is resisting pressure from overseas weakness. One negative in the report, however, is another tick lower for inflation expectations, down 1 tenth to 4.8 percent which is very low for this reading and is certain to be a topic of discussion at this week's FOMC meeting.

Recent History Of This Indicator:
The consumer confidence index rebounded sharply in December following an unusual dip in November. Earlier readings this month in other confidence measures have been surprisingly resilient despite the extreme volatility of the global markets. Forecasters are calling for little change in the January index, at 96.0. Assessments of the jobs market are always very closely watched in this report as a leading gauge for monthly employment data, and the Econoday consensus is hinting at another month of strength for January.