US consumer confidence drops unexpectedly on muted outlook

Washington

US CONSUMER confidence unexpectedly dropped for the fourth time in five months in December, as expectations for income and job-market conditions edged down.

The Conference Board's gauge decreased to 126.5 from an upwardly revised November reading, according to data released on Tuesday that missed the median projection in a Bloomberg survey of economists. The measure of present conditions rebounded from a five-month low, while economic expectations eased.

The decline signals that Americans remain cautious in a volatile global environment. At the same time, the index remains at elevated levels, propelled by a solid labour market, rising wages for the average worker, and a cooling trade war with China.

Americans are less optimistic about the future, with drops in expectations for employment and income: the share of those seeing more jobs in the next six months dropped to the lowest level since January and those seeing a decrease in income rose to the highest level since May.

For current economic conditions, the share of respondents who said jobs were hard to get increased to the highest level since June, while those saying jobs were plentiful also increased.

Other recent gauges of consumer sentiment are more upbeat, with the University of Michigan survey at a seven-month high and Bloomberg's index of consumer comfort rising to a nine-week high on greater optimism about the economy and personal finances.

"While consumers' assessment of current conditions improved, their expectations declined, driven primarily by a softening in their short-term outlook regarding jobs and financial prospects," Lynn Franco, director of economic indicators at the Conference Board, said in a statement. "While the economy hasn't shown signs of further weakening, there is little to suggest that growth, and in particular consumer spending, will gain momentum in early 2020."

The percentage of those planning to buy a car in the next six months increased to a four-month high, with more also saying they would purchase a home, while appliance buying plans fell to the lowest since February. The average inflation rate is projected to be 4.4 per cent in a year, the lowest reading since February. BLOOMBERG