Consumers Show Muted Optimism

Don Hogsett, February 5, 2007

Helped by an improving job market, consumer confidence rose, if only slightly, for a second straight month in January, ticking up by 0.3% to a reading of 110.3 from 110.0 in December, The Conference Board reported.

Buying plans improved along spirits in January, and consumers said they are ready to buy homes and cars in greater numbers than in the recent past. But the good news may be short lived, as consumers said that they're not as bullish about the future as they had been.

"This month's slight increase in confidence was solely the result of an improvement in the Present Situation Index, fueled primarily by a more favorable job market," said Lynn Franco, director of The Conference Board's Consumer Research Center. "Looking ahead, however, consumers are not as optimistic as they were in December. All in all, the Index suggests a moderate improvement in the pace of growth in early 2007."

Those saying conditions are good increased to 28.1% from 27.4% the prior month. But the number saying conditions are bad climbed even faster, to 16.5% from 14.9%. Driving overall higher confidence levels was the employment outlook. The number of consumers who said jobs are hard to get declined to 19.7% from 21.3%; the number who said jobs are plentiful also improved, rising to 29.9% from 27.6%.

Going forward, the outlook is more muted, with the number who think business conditions will worsen over the next six months rising to 8.0% from 7.8%. Those who think conditions will get better decreased to 16.2% from 16.7%.

Plans to purchase over the next six months

Source: The Conference Board
Homes 13.8
Carpets 6.4
Cars 14.8
Major appliances 0.4
Vacation -0.9


Region % change
Source: The Conference Board
New England -4.2%
Middle Atlantic 2.5
East North Central 0.6
West North Central 9.2
South Atlantic -1.6
East South Central 2.3
West South Central -0.3
Mountain 3.9
Pacific 2.3

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