Confidence boosted by labor market improvement

The Dec Conference Board Consumer Confidence figure was 64.5, better than expectations of 58.9 and up from 55.2 in Nov. It’s the best level since April and was led by a 10 pt jump in the Expectations component while the Present Situation still rose a good 8.4 pts to the highest since Sept ’08. Encouragingly, those that said jobs were Plentiful rose to the most since Jan ’09 while those that said jobs were Hard To Get fell to the least since Jan ’09. There was also an improvement in the answers to the Business Conditions questions both currently and with the outlook. Those that plan to buy a home within 6 months rose a touch but to the most since May but those that plan to buy an auto fell to the lowest since Oct ’10. Those that plan on taking a vacation rose to the best in a year. One year inflation expectations fell to 5.4% from 5.6% to the lowest of the year and coincident with the lowest gasoline prices since Feb. Bottom line, while the move higher in confidence is good to see, especially around the holidays, at 64.5 it is still almost half the 10 yr high of 111.9 in July ’07 (of course just as everything was about to change). But, importantly there seems to have been an improvement in the labor market as seen in today’s answers and also in the level of initial jobless claims over the past 3 weeks.

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