Consumer confidence declined again in December after continual dips in the labor market and numerous businesses and cities reinstating lockdown orders due to rising coronavirus cases.
The Conference Board, a business research organization, said that their index measuring consumer confidence currently sits at 88.6, down from 92.9 in November. The group further notes that the Present Situations Index saw a sharp decline from 105.9 to 90.3.
Consumers who felt business conditions were “good” made up 16%, a decrease from 18% last month. Those claiming that conditions were “bad” made up 39%, an increase from roughly 34% in November.
However, consumers this month have a more upbeat outlook on the future ahead. 29% expect business conditions to improve over the next six months, an increase of 5% from the month prior. Those expecting conditions to worsen decreased by a percentage point to 22%.
Job prospects show positive results with 27% expect more jobs, a 2% increase from last month, while 16.8% expect to see a marginal increase in income.
“Consumers’ assessment of current conditions deteriorated sharply in December, as the resurgence of Covid-19 remains a drag on confidence,” said Conference Board executive Lynn Franco. “Overall, it appears that growth has weakened further in Q4, and consumers do not foresee the economy gaining any significant momentum in early 2021.”
Though a coronavirus relief package has been passed, coronavirus vaccines are being distributed, and jobless claims show beginning signs of stabilizing, some note that these efforts were too little too late to restore the consumer confidence going into the new year.
“The storm clouds are growing darker and the worst may be yet to come,” said MUFG chief economist Chris Rupkey, “The new coronavirus outbreak means the economy will be flirting with disaster in the first quarter of 2021 where a downturn is possible despite Congress throwing more money our way.”