US consumer confidence increases slightly in Jan

28 January, 2021 12:00 AM printer

WASHINGTON: US consumer confidence rose moderately in January while lingering concerns about the COVID-19 pandemic led to a further deterioration in households’ perceptions of the labour market, raising the risk of a second straight month of job losses.

But the survey from the Conference Board on Tuesday showed consumers more than willing to buy homes and automobiles in the next six months, indicating that the housing market and manufacturing industry will continue to underpin the economy, report agencies.

“The slow rollout of the vaccines and the still-raging pandemic continue to depress consumer confidence despite the prospect of further fiscal aid and a brighter health situation,” said Kathy Bostjancic, chief US financial economist at Oxford Economics in New York.

The Conference Board’s consumer confidence index increased to a reading of 89.3 this month from 87.1 in December. The slight gain likely reflected nearly US$900 billion in additional pandemic relief provided by the government at the end of December, which lifted consumers’ near-term expectations.

The was no indication that the Jan 6 storming of the US Capitol by former President Donald Trump’s supporters had impacted on confidence. The cut-off date for the survey was Jan 14. Economists polled by Reuters had forecast the index little changed at 89 in January.

The survey’s present situation measure, based on consumers’ assessment of current business and labor market conditions, fell to a reading of 84.4 from 87.2 in December. The expectations index based on consumers’ short-term outlook for income, business and labor market conditions increased to 92.5 from a reading of 87.0 in December, suggesting households foresee conditions improving in the near term.

President Joe Biden has unveiled a US$1.9 trillion recovery plan from the pandemic. The new Biden administration has pledged to speed up and simplify the distribution of vaccines.

More than 25 million people have been infected by the virus, with the death toll over 420,000 since the pandemic started in the United States in early 2020. About 6 per cent of the US population has so far been vaccinated. Economists said though Biden’s rescue plan was facing resistance from some lawmakers, that was unlikely to derail the recovery from the pandemic.

“It is not likely we will see any household and business subsidy plan passed before March or April,” said Joel Naroff, chief economist at Naroff Economics in Holland Pennsylvania. “That should be early enough to get us through the year, even if there are significant cuts to the subsidies.”

US stocks were little changed. The dollar slipped against a basket of currencies. US Treasury prices were lower.

The survey’s so-called labour market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, deteriorated to a reading of -3.2 this month from -1.9 in December. That measure closely correlates to the unemployment rate in the Labor Department’s employment report.