WASHINGTON: US consumer confidence posted sharp gains in December, with survey respondents saying they had high expectations for business, income and employment in the coming six months.
The Conference Board said Tuesday that its consumer confidence index jumped 4.3 points to 113.7, up from 109.4 in the month before.
The jump was solely due to an increase in the Expectations Index, according to Lynn Franco, the board’s director of economic indicators. That index hit a 13-year high at 105.5, with post-election optimism most pronounced among older consumers.
“Consumers’ assessment of current conditions, which declined, still suggests that economic growth continued through the final months of 2016,” Franco said in a statement.
The share of consumers saying business conditions were good fell 0.5 points to 29.7 percent but those saying things were bad rose by a greater degree, 2.1 points to 17.3 percent.
Views on the current jobs situation were more stable, with the share of people saying jobs were “plentiful” falling 0.9 points to 26.9 percent while those who said jobs were hard to get rose 1.3 points to 22.5 percent.
The short-term outlook was much rosier. Expectations for business conditions jumped 7.2 points to 23.6 percent and those foreseeing more jobs moved up 5.9 points to 21 percent.
“Looking ahead to 2017, consumers’ continued optimism will depend on whether or not their expectations are realized,” Franco said.
Interest rates have also risen on expectations that Trump’s economic plans will accelerate growth and inflation and the Federal Reserve will ratchet up the pace of hikes to its benchmark overnight lending rate. The Fed raised that rate earlier in December for the first time this year by a quarter percentage point to a range of 0.50 percent to 0.75 percent, and most forecasters expect at least two hikes in 2017.
Trump will inherit an economy that by most assessments is on solid footing, even if growth has been subdued for much of outgoing President Barack Obama’s term. The unemployment rate recently dropped to 4.6 percent, its lowest since the Great Recession ended, and the economy has added an average of 188,000 new jobs a month over the past 12 months.
With benchmark 10-year Treasury yields around their highest in more than two years, the average rate on a 30-year fixed-rate mortgage has hit its highest since May 2014, potentially posing a risk to the US housing price recovery, which continued apace in October.
The S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas rose 5.1 percent in October on a year-over-year basis, up from a downwardly adjusted 5.0 percent climb in September and matching the estimate of a 5.1 percent gain from a Reuters poll of economists.
“Home prices and the economy are both enjoying robust numbers,” said David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.
“However, mortgage interest rates rose in November and are expected to rise further as home prices continue to out-pace gains in wages and personal income,” Blitzer said.
“With the current high consumer confidence numbers and low unemployment rate, affordability trends do not suggest an immediate reversal in home price trends. Nevertheless, home prices cannot rise faster than incomes and inflation indefinitely.”
Prices in the 20 cities rose 0.6 percent in October from a revised 0.5 percent in September on a seasonally adjusted basis, the survey showed, outpacing expectations for a 0.5 percent increase.
On a non-seasonally adjusted basis, prices increased 0.1 percent from September.
The biggest year-over-year gains were recorded in the West and Texas, including gains of more than 10 percent in the Seattle and Portland areas. Prices in the Denver and Dallas markets increased by more than 8 percent from a year earlier.
The smallest annual gain was in the New York metro area, where prices rose just 1.7 percent.
The Conference Board said Tuesday that its consumer confidence index jumped 4.3 points to 113.7, up from 109.4 in the month before.
The jump was solely due to an increase in the Expectations Index, according to Lynn Franco, the board’s director of economic indicators. That index hit a 13-year high at 105.5, with post-election optimism most pronounced among older consumers.
“Consumers’ assessment of current conditions, which declined, still suggests that economic growth continued through the final months of 2016,” Franco said in a statement.
The share of consumers saying business conditions were good fell 0.5 points to 29.7 percent but those saying things were bad rose by a greater degree, 2.1 points to 17.3 percent.
Views on the current jobs situation were more stable, with the share of people saying jobs were “plentiful” falling 0.9 points to 26.9 percent while those who said jobs were hard to get rose 1.3 points to 22.5 percent.
The short-term outlook was much rosier. Expectations for business conditions jumped 7.2 points to 23.6 percent and those foreseeing more jobs moved up 5.9 points to 21 percent.
“Looking ahead to 2017, consumers’ continued optimism will depend on whether or not their expectations are realized,” Franco said.
Interest rates have also risen on expectations that Trump’s economic plans will accelerate growth and inflation and the Federal Reserve will ratchet up the pace of hikes to its benchmark overnight lending rate. The Fed raised that rate earlier in December for the first time this year by a quarter percentage point to a range of 0.50 percent to 0.75 percent, and most forecasters expect at least two hikes in 2017.
Trump will inherit an economy that by most assessments is on solid footing, even if growth has been subdued for much of outgoing President Barack Obama’s term. The unemployment rate recently dropped to 4.6 percent, its lowest since the Great Recession ended, and the economy has added an average of 188,000 new jobs a month over the past 12 months.
With benchmark 10-year Treasury yields around their highest in more than two years, the average rate on a 30-year fixed-rate mortgage has hit its highest since May 2014, potentially posing a risk to the US housing price recovery, which continued apace in October.
The S&P CoreLogic Case-Shiller composite index of 20 metropolitan areas rose 5.1 percent in October on a year-over-year basis, up from a downwardly adjusted 5.0 percent climb in September and matching the estimate of a 5.1 percent gain from a Reuters poll of economists.
“Home prices and the economy are both enjoying robust numbers,” said David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.
“However, mortgage interest rates rose in November and are expected to rise further as home prices continue to out-pace gains in wages and personal income,” Blitzer said.
“With the current high consumer confidence numbers and low unemployment rate, affordability trends do not suggest an immediate reversal in home price trends. Nevertheless, home prices cannot rise faster than incomes and inflation indefinitely.”
Prices in the 20 cities rose 0.6 percent in October from a revised 0.5 percent in September on a seasonally adjusted basis, the survey showed, outpacing expectations for a 0.5 percent increase.
On a non-seasonally adjusted basis, prices increased 0.1 percent from September.
The biggest year-over-year gains were recorded in the West and Texas, including gains of more than 10 percent in the Seattle and Portland areas. Prices in the Denver and Dallas markets increased by more than 8 percent from a year earlier.
The smallest annual gain was in the New York metro area, where prices rose just 1.7 percent.
