U.S. consumer confidence declined this month as persistent inflation and the highly-contagious omicron variant of the coronavirus dinged the optimism of Americans.
The Conference Board, a business research group, said Tuesday that its consumer confidence index — which takes into account consumers’ assessment of current conditions and the their outlook for the future — fell to 113.8 in January, from 115.2 in December.
The Conference Board’s present situation index, which measures consumers’ assessment of current business and labor conditions, rose this month to 148.2 from 144.8 in December. The expectations index, based on consumers’ six-month outlook for income, business and labor market conditions, fell in January to 90.8 from 95.4 last month.
Even with the decline, consumer confidence remains high in the U.S. despite surging prices for just about everything. Earlier this month, the Labor Department reported that inflation rose at its fastest pace in nearly 40 years in December, a 7% spike.
Prices rose sharply in 2021 for cars, gas, food and furniture but that has not hindered the U.S. consumer. The proportion of people planning to purchase homes, automobiles, and major appliances over the next six months all increased, the Conference Board said.
Concern over ricing prices actually declined for the second straight month, but it does remain elevated after inflation hit a 13-year high in November, the board said.
On Wednesday, the Federal Reserve is expected to signal its intent to begin raising interest rates in March for the first time in three years, the main mechanism for combatting inflation. Economists have expressed concern that the Fed is already moving too late to combat surging prices.
The prospect of higher rates has investors dumping stocks with abandon. Last week, a sell-off sent the S&P 500 index into its worst weekly loss since the pandemic erupted in March 2020. On Monday, the Dow Jones Industrial Average declined more than 1,000 points before rallying.
Major U.S. markets are down between 1% and 2% Tuesday.