Consumer confidence hits two-year high
U.S. consumer confidence reached a two-year high, but expectations for solid growth in 2010 are slim, according to a private study released today.
The final index of sentiment from the Thomson Reuters and University of Michigan Surveys of Consumers hit 74.4 in January, the highest point since January 2008. The tally represented a 2.6% increase from December’s 72.5 and a 21.6% boost from the 61.2 marked in January 2009.
But despite the generally positive feeling that the worst is over in the overall economy, consumers were dour about their personal finances, the report said. Unlike in past economic cycles, when consumers expected their own gains to keep pace with the nation’s, many now expect their incomes and job prospects to stay stagnant through 2010.
Consumers were feeling vulnerable about their fragile investments and reserve funds, while being weighed down by debts, squeezed by tight credit and shadowed by a cloud of foreclosures and bankruptcies.
“Persistently high joblessness as well as stagnating incomes will mean that consumers will remain cautious spenders, preferring to add to their savings and reserve funds,” said chief economist Richard Curtin in a statement. “Overall, the data indicate slowly improving consumer spending during the year ahead.”
The index of current economic conditions rose in January to 81.1, a 4% increase from December’s 78 and a 22% boom from the 66.5 noted a year earlier.
Consumer expectations jumped 1.7% to 70.1 from 68.9 in December, a 21.3% leap from 57.8 in January 2009.Fewer consumers -- 45% -- said their finances had deteriorated; that's down from 49% in December and 53% last January. More than 20% said their finances had actually improved.
But 56% of households said they don’t expect their income to increase in 2010.
The survey data suggests, according to researchers, that total real personal spending will rise 1.8% in 2010, make this the slowest consumer exit from recession in the post-World War II period.
-- Tiffany HsuPhoto: Customers at ATMs in downtown Los Angeles in 2009. Credit: Ricardo DeAratanha / Los Angeles Times