US: CB Consumer Confidence Falls To 113.8 Above Expectations

According to the latest US Conference Board survey, headline Consumer Confidence fell to 113.8 in January from 115.2 (revised lower from 115.8) in December, less than the expected decline to 111.8.

The drop slight drop reflects the impact of the rapid spread of the Omicron Covid-19 variant in the US over the last few weeks, but remains substantially above prior pandemic lows in the 80 area, endorsing the Fed’s view that the economy has become more resilient to each new Covid wave.

Currency markets do not seem to have reacted to the latest, despite it underpinning the idea of economic resilience in the face of the Omicron variant which should underpin Fed confidence in the economic recovery.

Consumer confidence moderated in January, following gains in the final three months of 2021. The Present Situation Index improved, suggesting the economy entered the new year on solid footing.

However, expectations about short-term growth prospects weakened, pointing to a likely moderation in growth during the first quarter of 2022. The proportion of consumers planning to purchase homes, automobiles, and major appliances over the next six months all increased.

Meanwhile, concerns about inflation declined for the second straight month, but remain elevated after hitting a 13-year high in November 2021. Concerns about the pandemic increased slightly, amid the ongoing Omicron surge. Looking ahead, both confidence and consumer spending may continue to be challenged by rising prices and the ongoing pandemic.