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Home | Daily Dose | Consumer Optimism Declines as Uncertainty Lingers
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Consumer Optimism Declines as Uncertainty Lingers

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Despite improvements to personal finances, consumer sentiment moved downward in January, according to one of the leading measures.

The Surveys of Consumers' Index of Consumer Sentiment, released jointly by Thomson Reuters and the University of Michigan's Survey Research Center, dropped to 81.2 this month from December's 82.5. Compared to a year ago, January's survey was up an even 10 percent from 73.8.

The monthly decline stands in contrast to the Conference Board's Consumer Confidence Index, which rose for the second straight month in the group's most recent report.

According to Surveys of Consumers, respondents judged their recent financial progress in January more favorably than any other time in the past six months. When asked to explain how their finances had changed, income increases were mentioned by the highest proportion of consumers since late 2007.

At the same time, however, only one in four households in the January survey reported being better off financially than they were five years ago, and half said they expect no income increase in the year ahead.

"Despite the recent economic gains, consumers' outlook for their finances as well as the national economy over the longer term have remained more resistant to improvement than in past recoveries," said Richard Curtin, chief economist for Surveys of Consumers.

"This deeply rooted uncertainty about future economic conditions was first sparked by the Great Recession," Curtin added, and it "has been sustained by the growing recognition that no federal policy has yet emerged that will restore long term economic prosperity anytime soon."

The index's measure of consumer perceptions about current conditions was down slightly to 96.8, outperforming last year's reading by 13.9 percent—largely due to improved job prospects as the economy continues to march on.

The expectations index, meanwhile, was down to 71.2 (6.9 percent ahead of last year), with strained budgets and slow improvements in home values expected.

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About Author: Tory Barringer

Tory Barringer
Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington's student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News' sister publication, MReport, which focuses on mortgage banking news.

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