“Plunging equity markets unsurprisingly dragged confidence lower in December, but a strong jobs market, rising wages and lower fuel costs suggest there are plenty of positives for consumers at the start of 2019,” note ING analysts.
Key quotes
“Amid a dearth of data releases – partly year-end related and partly due to the government shutdown resulting in most official data being postponed – the December Conference Board measure of consumer sentiment gets even more attention than usual. Unfortunately, it isn’t good news with the headline index falling more than expected to 128.1 from 136.4 in November.”
” However the fact that sentiment only dropped back to the levels seen in the summer (when equities were still riding high) underlines the fact that there are still clear positives for consumers elsewhere in the economy. Indeed, the jobs market remains very hot with demand for workers outstripping supply. This means wages are being bid up and employees are feeling the benefits.”
“Things will get tougher next year though and this explains why the expectations component of the report bore the brunt of the decline (99.1 versus 112.3 in November). We have talked at length about the intensifying headwinds facing the US economy in 2019 – namely the lagged effects of higher borrowing costs, the stronger dollar, the fading support from the fiscal stimulus and weaker external demand at a time of rising trade protectionism. These factors will increasingly weigh on sentiment in 2019, which is likely to lead to a slowdown in consumer spending growth next year.”
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