Consumer confidence inched toward record highs in the United States amid a standstill of the trade war and a generally strong labor market.
According to The Conference Board, consumer confidence in the U.S. in the fourth quarter climbed modestly to a near-historic high of 123. The research group attributed the increase to improved sentiment about job prospects and spending intentions, led by rising wages and a low unemployment rate.
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The report offered some relief a week after the Labor Department released figures showing that American employers added 145,000 jobs in December, falling short of expectations of a 160,000 increase, while wages also showed a disappointing gain of just 2.9% year over year versus projections of a 3.1% rise.
“Strong labor markets, rising wages, and low consumer price inflation supported consumer spending in 2019,” said Elizabeth Crofoot, senior economist at The Conference Board.
Crofoot, however, cautioned that an “intensification of concerns about job security and personal financial well-being, especially if combined with lingering geopolitical uncertainties” could eventually “erode consumer confidence in the economy and cause them to rein in their spending.”
Nevertheless, the unemployment rate in December held steady at 3.5%, marking yet another month at that half-century low. The Bureau of Labor Statistics revised November’s total to 256,000 from 266,000, while October’s figures were also downward-adjusted to 142,000 from 156,000. This past December was also the ninth straight year that the economy has added nearly 2 million jobs.
Overall, global consumer confidence remained unchanged at 107 (100 or higher is considered positive), suggesting consumers have remained generally optimistic. Although North America and the Asia-Pacific regions noted gains, confidence appeared to be under strain in economies such as China, Mexico and Europe.
Of the 64 markets surveyed by The Conference Board, 30 of them experienced a dip in consumer confidence. It marked a slight improvement from the prior quarter, when 33 markets recorded a decline. The Conference Board expects global economic growth to advance to 2.5% in 2020 — up from 2.3% in 2019.
“We should not take it for granted that consumer spending will continue to prop up the economy,” said chief economist Bart van Ark. “Increased investment, an improvement in manufacturing production and trade, and more productivity growth are critical elements of a growth recovery.”
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