Sunday 24th of January 2021

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U.S. Consumers More Confident About The Future

Consumers are excited about the future but they still don’t feel so good about the present.

Those are the findings of The Conference Board, which determined the “expectations” index is at its highest point in two years. However, the report’s “present situation index” dropped to its lowest level in 26 years. Still, more employers are expressing confidence by saying they plan to hire workers next year.

“While the worst of the economic times are behind us, it’s not euphoria,” said Lynn Franco, director of the board’s Consumer Research Center. “Confidence is stronger than when we started the year, but for much of the last several months we’ve been moving sideways.”

The levels are determined through monthly surveys of 5,000 U.S. households. Economists are interested in the numbers because about 70 percent of the nation’s economic action measured by the federal government is based on consumers’ buying goods and services.

The consumer confidence index reached a three-month high. This month it registered 52.9 after the 50.6 in November. In October the level was 48.7 and its lowest level was 25.3 in February.

With improved business and labor markets, the expectations for the first half of 2010 spiked to 75.6, close to the 75.8 in December 2007. The number was 70.3 in November.

The present situation index reflected the uncertainty of short-term income. The level fell to 18.8 from its 21.2 in November. The record low was 17.5 in February 1983.

“Regarding income, however, consumers remain rather pessimistic about their short-term prospects, and this will likely continue to play a key role in spending decisions in early 2010,” Franco said.

Boosting consumer confidence isn’t easy. About two years passed after the last recession eight years ago until the confidence level reached 90, which is considered healthy. Eventually, the index was as high as 144.7.

In a jobless recovery such as the one occurring now, it takes even longer. After the recession of the early 1990s, it took three years for confidence to bounce back.

On the job front, 20 percent of the more than 2,700 hiring and human resource professionals surveyed by said they expect to add permanent, full-time employees next year but the growth in jobs isn’t expected to start until the second quarter. Last year’s survey revealed 14 percent expected to hire this year.

The scene is slightly better when it comes to layoffs, too. Only 9 percent of the employers surveyed in November expect to let employees go compared to the 16 percent expected last year for 2009. Staffing levels are expected to stay the same next year for 61 percent of the respondents.