Econ Report Card: Consumer Confidence Drops

Consumer confidence unexpectedly drops.

Consumer confidence has been on the mend the last couple of months but fell unexpectedly in January according to the Conference Board as current business conditions and employment indexes declined.

The overall indicator was 64.8 in December and clocked in at 6.1. in January while most analysts had been expecting a reading in the range of 68 so this was a significant miss in this report.  Consumer confidence is an important indicator as consumer spending makes up 70% of the U.S. economy.  Forward looking expectations were also more somber regarding future business conditions and income.  Only 13% of consumers think business conditions are good and 43% think jobs are hard to get.

Major Consumer ETFs:

Consumer Discretionary Select Sector SPDR ETF XLY

Consumer Staples Select Sector SPDR ETF XLP

Vanguard Consumer Staples ETF VDC

Consumer ETFs have been in a solid uptrend since mid-December lows as hopes for an improving economy supported ETF prices.

Bottom Line: Normal readings during good economic times are in the range of 90 so current readings in the 60s reflect the ongoing economic difficulties in the United States which could be reflected in further weak consumer spending and economic activity.

Conference Board Index

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