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Consumers more upbeat in January

Consumer confidence rose to a four-month high in January but improved less than economists had expected and remained weak overall, a survey showed on Friday.
/ Source: Reuters

Consumer confidence rose to a four-month high in January but improved less than economists had expected and remained weak overall, a survey showed on Friday.

The Reuters/University of Michigan Surveys of Consumers said its final index reading of confidence for January rose to 61.2 from December’s 60.1.

The final January reading is down slightly from the preliminary result earlier in the month of 61.9 and overall it remains in depressed territory, reflecting the deepening year-old recession in the world’s largest economy.

“Nearly all consumers now anticipate the deepest and longest recession in the post-World War Two era, but consumers do not expect the economy to sink into a 1930s style depression,” the Surveys of Consumers said.

Economists had expected a reading of 61.9, according to the median of forecasts in a Reuters poll. Their 63 forecasts ranged from 59.0 to 65.0.

The report also showed inflation expectations rose, which might actually be good news considering that economists see a deflationary spiral lower in prices, wages and business activity a distinct possibility given the unhealthy state of the economy.

One-year inflation expectations rose to 2.2 percent from 1.7 percent in December. Five-year inflation expectations increased to 2.9 percent from 2.6 percent.

Despite the increase in the overall sentiment index, consumers rated their current economics conditions worse than the month before, with this gauge falling to 66.5 from 69.5.

The University of Michigan confidence index dates back to 1952 and is still mired near the record low of 51.7 hit in May 1980.

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