The S&P 500 (SPX) is trading slightly higher on Tuesday after The Conference Board’s (TCB) Consumer Confidence Index (CCI) fell to a nine-month low.
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December’s CCI tallied at 89.1, below the estimate of 91.0 and falling from 92.9 in November. A reading above 100 indicates optimism, while a reading below 100 indicates pessimism.
“Confidence weakened for a fifth consecutive month as perceptions of business conditions were negative, and apprehensions about jobs and income deepened,” said TCB.
Can Consumer Confidence Predict Recessions?
The Expectations Index, a component of the CCI that tracks consumers’ short-term expectations of business and labor market conditions, remained unchanged at 70.7. However, the index has stayed below 80 for 11 consecutive months and continues to trigger a recession warning, said TCB.
At the same time, consumers don’t appear to be overly worried about a sustained economic downturn. Fewer respondents believe that a recession is “very likely” during the next 12 months, while 18.4% expect their income to increase, up from 17.6% in November. In addition, 18% of consumers forecast business conditions to improve in the future, slightly down from 18.1%.
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