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WASHINGTON (AP) – Jan. 25, 2011 – The Consumer Confidence Index rose in January to its highest level in eight months with Americans growing a little more confident about the job market and business conditions.
The Conference Board said Tuesday its Consumer Confidence Index climbed to 60.6 this month, up from 53.3 in December. While that reading was better than economists had expected, confidence is still far from the 90 level that signals a healthy consumer mindset.
The January figure was the highest since last May’s 62.7. At that time, consumer attitudes were improving as economic growth seemed to be taking off. However, the economy stalled in the summer, and so did confidence.
Confidence has been depressed by unemployment that surged during the country’s worst recession since the 1930s and has stayed stubbornly high even though the downturn ended in June 2009. Confidence has not been above 90 since the recession began in December 2007.
However, moods may be lifting a bit. A new survey from the National Association for Business Economics reported Monday that the number of firms expressing positive hiring plans was at its highest level in 12 years.
In the Conference Board survey, the percentage of people surveyed who felt jobs were hard to get fell slightly to 43.4 percent from 46 percent in December. The share who expected to see more jobs six months from now rose to 16 percent from 14.2 percent.
While confidence has stayed weak since the recession ended in summer 2009, consumer spending has been picking up. During the 2010 holiday shopping season, sales increased at the fastest rate in six years.
Economists are hoping that consumer confidence will keep improving in 2011 as the economy begins to show greater signs of strength and unemployment declines.
The jobless rate fell to 9.4 percent in December from 9.8 percent in November, but the economy added only 103,000 jobs. Employers added 1.1 million jobs for all of 2010, or about 94,000 a month. The nation still has 7.2 million fewer jobs than it did in December 2007, when the recession began.
But many economists expect the nation will create twice as many jobs this year as it did last year. They note that people who still have jobs are not as worried about losing them as they might have been a year ago, and that people are spending more.
Economists expect that a tax cut which took effect in January – reducing the amount taken out of workers’ paychecks to pay for Social Security – will also lead to greater spending in the new year.
Copyright © 2011 The Associated Press, Martin Crutsinger, AP economics writer.