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- US Consumer Confidence Dips as Sticky Inflation Eats Into Sentiment - Conference Board
US Consumer Confidence Dips As Sticky Inflation Eats Into Sentiment - Conference Board
Sumaira FH Published January 31, 2023 | 11:38 PM
Consumer confidence, one of the pillars of the US economy, fell in January as relatively high inflation despite aggressive rate hikes by the Federal Reserve made Americans more protective with their money, the Conference Board said on Tuesday
WASHINGTON (UrduPoint News / Sputnik - 31st January, 2023) Consumer confidence, one of the pillars of the US economy, fell in January as relatively high inflation despite aggressive rate hikes by the Federal Reserve made Americans more protective with their money, the Conference Board said on Tuesday.
While consumers started 2023 feeling better about economic and labor conditions, they had wavering confidence about what is to come in the next six months, said Ataman Ozyildirim, senior director of economics at The Conference Board, a business think-tank.
"Consumers were less upbeat about the short-term outlook for jobs," Ozyildirim said. "They also expect business conditions to worsen in the near term."
Consumer spending accounts for about 70% of US gross domestic product.
While a majority of Americans expect their incomes to remain relatively stable in the months ahead and were firm about purchasing plans for autos and appliances, Ozyildirim said "fewer consumers are planning to buy a home - new or existing."
In summation, he presented the Conference Board's numbers showing a drop in consumer confidence for January, despite aggressive rate hikes by the Federal Reserve over the past year in trying to curb inflation.
The board's consumer confidence index - a closely watched metric gauging attitudes about the current and future strength of the economy - measured 107.
1 in January. It was down from an upwardly revised 109 in December and below economists' expectations.
The Fed has added 425 basis points to rates since March via seven increases. Prior to that, rates peaked at just 25 basis points, as the central bank slashed them to nearly zero after the global COVID-19 outbreak in 2020.
After executing four jumbo rate hikes of 75 basis points back-to-back from June through November, the Fed imposed a more modest 50-basis point increase in December. For its next rate decision on February 1, economists expect the central bank to announce an even smaller hike of 25 basis points. The last time the Fed had a 25 basis-point increase was in March 2022, at the start of its current rate hike cycle.
Inflation itself, as measured by the Consumer Price Index, or CPI, rose by 6.5% in the 12 months to December - at least three times above the Fed's target of 2% per annum.
The CPI hit a 40-year high in June when it grew at an annual rate of 9.1%. It has slowed thereafter, with its smallest advance since October 2021, with the Fed bent on bringing it back to 2%.
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