The Conference Board's monthly report on consumer confidence in the month of January is out, and the number is not pretty. The reading came to 58.6, which is the weakest reading in more than a year. Bloomberg had a consensus of 65.1, and the range of estimates from its polled economists was 61.6 to 70.0.
Both major components fell in the is report: the Expectations Index declined to 59.5 in January from 68.1 in December, while the Present Situation Index fell to 57.3 in January from 64.6 in December.
Those claiming business conditions are "good" fell to 16.7% from 17.2%, while those stating business conditions are "bad" rose to 27.4% from 26.3%.
We may get some bias here for Friday's unemployment reading. The Conference Board said that consumers' assessment of the labor market has also grown more negative: those saying jobs are "plentiful" fell to 8.6% from 10.8%, while those claiming jobs are "hard to get" rose slightly to 37.7% from 36.1%.
The index fell 6.4 points in December to 65.1 initially, with the weakness centered in the expectations component after plunging nearly 15 points to 66.5. The Conference Board stated:
Consumers are more pessimistic about the economic outlook and, in particular, their financial situation. The increase in the payroll tax has undoubtedly dampened consumers' spirits and it may take a while for confidence to rebound and consumers to recover from their initial paycheck shock.
The headline Consumer Confidence Index is based on consumers' perceptions of current business and employment conditions, as well as their expectations for six months with an outlook in business conditions, employment and income. Some 3,000 households across the country are surveyed each month to compile the consumer confidence report.
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