- Sputnik International
World
Get the latest news from around the world, live coverage, off-beat stories, features and analysis.

Last-Minute Shopping Lifts US Consumer Sentiment in December

© AFP 2023 / FREDERIC J. BROWNPeople shop for bargains at a Target store in Alhambra, California, which opened at 6pm on Thanksgiving Day, November 26, 2016.
People shop for bargains at a Target store in Alhambra, California, which opened at 6pm on Thanksgiving Day, November 26, 2016. - Sputnik International
Subscribe
A key macro indicator to the US economy, consumer confidence, surpassed earlier estimates as shoppers rushed into stores at the close of holiday season, while a brighter outlook into 2016 supports growth expectations.

A view of the Federal Reserve - Sputnik International
US GDP Growth Slows to 2% in Q3 as Dollar Weighs on Foreign Trade
Kristian Rouz — After initial sluggishness amidst the holiday shopping season, the measure of US consumer confidence rose above initial forecasts in December on last-minute shopping deals, indicating Americans' growing appetite for discounts. The upbeat labor market and overall improving economy conditions also supported consumer confidence, suggesting US GDP expansion, largely driven by consumer spending, would persist well into 2016.

The New York-based private research entity, the Conference Board, reported its measure of consumer confidence has risen to a reading of 96.5 in December compared to that of 92.6 (revised) the previous month, reflecting the accelerated retail sales right at the close of holiday shopping season along with general improvements in the economy. Previous forecasts suggested the December reading would be 93.5 on average.

US consumer confidence has rebounded from its November drop, as households are more prone to spend amidst low fuel costs and a declining unemployment. US shoppers rushed into last-minute discount sales, with demand rife for goods ranging from automobiles to clothing. Growth in wages might further support consumer confidence, however, if wages index outpaces the general economic expansion, is might infer a deterioration in labor market as employers might want to cut staff in order to finance higher salaries.

"As 2015 draws to a close, consumers' assessment of the current state of the economy remains positive, particularly their assessment of the job market," Lynn Franco of the Conference Board said. "Looking ahead to 2016, consumers are expecting little change in both business conditions and the labor market."

Consumers constitute some 72% of the US economy, meaning the improved households' sentiment might push spending and investment higher, spurring inflation and overall growth, thus easing the US Federal Reserve's task of maintaining the economy on its track to normality.

Customers shop on widened aisles at a Wal-Mart Supercenter store in Springdale, Ark., Thursday, June 4, 2015 - Sputnik International
US Consumer Spending Slows Amid Weak Economic Confidence
The US economy is expanding at a 2.2% pace, still below the 3.3% historical average, while the US labor market has been adding an average 210,000 payrolls per month in 2015, resulting in unemployment rate dropping to 5% in November, in line with the Fed's ‘full employment' target. The US housing market is booming amidst high demand for the still affordable mortgage credits, driving the home prices up. Meanwhile, nationwide average of petrol prices is just above $2/gal., some 40% below their mid-2014 levels.

"Some of the primary things boosting confidence are strong labor market conditions and perhaps more importantly, low gasoline prices," Thomas Simons of the New York-based Jefferies Group LLC said. "On the margin, it should increase consumers' propensity to spend."

A separate consumer sentiment reading by University of Michigan also surpassed expectations, having risen to 92.6 in December, its highest since July.

Conference Board data indicated that US consumers are more likely to spend on home appliances and travel, while purchasing plans on cars or real estate as prevelant.

Newsfeed
0
To participate in the discussion
log in or register
loader
Chats
Заголовок открываемого материала