Dec. 30, 2004--Ending a four month slide, U.S. consumer confidence rose nearly 10 points in December, thanks to lower energy costs and a healthy stock market.
The Conference Board, a private research group based in New York, announced Tuesday that December's Consumer Confidence Index rose to 102.3 from 92.6 in November. Prior to yesterday's jump, the index had fallen every month since August.
Falling energy prices led the index's rebound, said Mark P. Vitner, Vice President and Senior Economist at Wachovia. "Not only have oil prices come down, but gasoline prices also came down quite rapidly since November, which was all factored into December's consumer confidence," he said.
Since October, oil prices have fallen roughly 34%, while gasoline at the pump is down 12%.
Though not as significant as the decline in energy prices, the year-end stock market rally bolstered consumer confidence as well. Between December 1 and December 20, the survey's cutoff date, both the Dow Jones Industrial and the S&P 500 gained, 2.26% and 1.49% respectively.
Consumers' current attitude about the economy, which is one part of the Consumer Confidence Index, registered at 105.9, up from 96.3 in November. Expectations for the next six months improved, too, rising nearly 10 points to 99.9.
Despite relatively weak jobs data, the number of respondents that said jobs are "plentiful" increased to 19.4% from 17.1%, while those claiming jobs are "hard to get" declined to 26.4% from 28%.
But Michael Moran, chief economist at Daiwa Securities, said that these figures still demonstrate a weak labor market. "We are in negative territory between those that say jobs are 'plentiful' and those that say jobs are 'hard to get,' meaning more people are saying jobs are hard to get. Plus, we are far below the types of readings we were getting in the 1990s."
Earlier this month, the government reported that 112,000 new jobs were created in November, half of what economists projected, and that the unemployment rate was 5.4%, relatively unchanged since July.
The Consumer Confidence Index is based on a survey of 5,000 U.S. households. December's results are preliminarily based on 2,700 respondents.
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