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Consumer Spending Unlikely to Gain Momentum in Early 2020

U.S. consumers have dialed down their short-term expectations in connection with concerns about the availability of jobs.

Any sense that jobs are plentiful and easy to get tends to raise confidence levels, and help with consumer spending. But in the December reading of the Consumer Confidence Survey, the concern wasn’t over a worsening economy and higher levels of unemployment. Rather, respondents in the Conference Board’s survey expressed concern that while jobs are still plentiful, they’re also becoming harder to get.

The mixed jobs front reading sent The Conference Board’s Consumer Confidence Index down slightly in December, falling from 126.8 in November to 126.5. Consumers were fairly confident about current conditions, as evidenced by the Present Situations component of the Index rising to 170.0 from 166.6 last month. The issue is more about how they feel regarding the future, as the Expectations component–which measures short-term outlook for income, business and labor market conditions–fell to 97.4 from 100.3 last month.

“While the economy hasn’t shown signs of further weakening, there is little to suggest that growth, and in particular consumer spending, will gain momentum in early 2020,” said Lynn Franco, director of economic indicators at The Conference Board.

December’s reading shows consumers were moderately optimistic about economic growth. But in their assessment of current conditions, those who said jobs are “plentiful” rose to 47 percent from 44 percent, as those claiming jobs are “hard to get” also increased to 13.1 percent from 12.4 percent. For the short term, those who said they expect business conditions to worsen fell to 9.3 percent from 11.4 percent. However, when it came to labor market conditions, the number who expect more jobs ahead fell to 15.3 percent from 16.5 percent, while those who anticipate fewer jobs rose to 14.9 percent from 13.4 percent.

Separately, the number of respondents who expect their short-term income prospects to improve fell slightly to 21.1 percent from 22.9 percent, while the proportion who expect a decrease rose to 7.7 percent from 6.2 percent.

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While the Index “unexpectedly” slipped in December, there “isn’t an immediate cause for concern as sentiment remains solid,” noted economists at Moody’s Analytics on Tuesday, following the Conference Board’s report of its latest survey.

Consumers in general have been showing signs that they are more closely watching their pocketbooks.

Spending over the holiday season was up just 3.4 percent, according to Mastercard Spending Pulse data. That’s far short of the robust spending from the past two years when total sales in 2018 climbed 5.1 percent on top of the 4.9 percent holiday gain in 2017. As they look for more value, consumers have favored the off-price sector instead of department stores and mall-based specialty doors.