KPI – December 2024: The Brief
KPI – December 2024: State of Manufacturing
KPI – December 2024: State of Business – Automotive Industry
KPI – December 2024: State of the Economy
KPI – December 2024: Recent Vehicle Recalls
Below is a synopsis of consumer confidence, sentiment, demand and income/spending trends.
The University of Michigan Survey of Consumers is a survey consisting of approximately 50 core questions covering consumers’ assessments of their personal financial situation, buying attitudes and overall economic conditions. The Survey of Consumers registered 70.1 in September, 70.5 in October and 71.8 in November. The preliminary reading for December is 74.0 – its highest reading in seven months.
According to Joanne Hsu, director of Survey of Consumers, “A surge in buying conditions for durables led Current Economic Conditions to soar more than 20%. Rather than a sign of strength, this rise in durables was primarily due to a perception that purchasing durables now would enable buyers to avoid future price increases.”
Takeaways, courtesy of Survey of Consumers:
- Overall, year-ahead inflation expectations rose from 2.6% in October to 2.9% in November – the highest reading in six months, but within the 2.3%-3.0% range seen in the two years pre-pandemic.
- Long-run inflation expectations edged down from 3.2% in October to 3.1% in November – modestly elevated relative to the range of readings seen in the two years pre-pandemic.
Likewise, The Conference Board Consumer Confidence Index increased from 109.6 in October to 111.7 (1985 = 100) in November. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased by 4.8 points to 140.9.
Meanwhile, the Expectations Index – based on consumers’ short-term outlook for income, business and labor market conditions – ticked up 0.4 points to 92.3, well above the threshold of 80 that usually signals a recession ahead.
“Consumer confidence continued to improve in November and reached the top of the range that has prevailed over the past two years. The increase was mainly driven by more positive consumer assessments of the present situation, particularly regarding the labor market,” says Dana M. Peterson, chief economist at The Conference Board.
Important takeaways, courtesy of The Conference Board:
- Consumers were “substantially more optimistic” about future job availability, which reached its highest level in nearly three years.
- Consumer expectations about future business conditions were relatively unchanged.
- Consumers were slightly less positive about future income but more optimistic about the stock market: 56.4% expect stock prices to increase over the next year.
- The share of consumers expecting higher interest rates to decline over the next 12 months is 43.6%. Meanwhile, the share expecting lower rates increased to 34.6% – the highest since April 2020.
- Average 12-month inflation expectations declined from 5.3% last month to 4.9% in November – the lowest since March 2020.
November’s boost was led by a large jump in confidence among consumers under 35 years old. Confidence among consumers aged 35 to 54 declined slightly after surging last month. All income groups reported higher confidence except those at the very top (earning over $125,000) and bottom (earning less than $15,000). On a six-month moving average basis, householders aged under 35 and those earning over $100,000 remained the most confident.
“The proportion of consumers anticipating a recession over the next 12 months fell further in November and was the lowest since we first asked the question in July 2022. Consumers’ assessments of their Family’s Current Financial Situation fell slightly but optimism for their finances over the next six months reached a new high,” Peterson says.
Elevated prices remain top of mind. On a six-month moving average basis, purchasing plans for homes stalled in November.
When asked about plans to buy more durable goods or services over the next six months, consumers continued to express “a slightly greater preference” for purchasing goods. Of concern, consumers noted uncertainty about future purchases. Buying plans for most appliances and electronics were down.
Regarding services, consumers’ priorities were little changed; however, they plan “to spend a bit less” in most categories going forward – except for travel and healthcare.
Across all age and income levels, consumers “overwhelmingly” selected higher prices as their top concern and lower prices as their top wish for the new year. Higher taxes, wars and conflict, social unrest and household finances were major – although less acute – concerns for consumers as well.
CONSUMER INCOME & SPENDING
According to the U.S. Bureau of Economic Analysis (BEA), in November 2024 personal income increased $71.1 billion (0.3% at a monthly rate). Disposable personal income (DPI) – personal income less personal current taxes – increased $61.1 billion (0.3%), while personal consumption expenditures (PCE) increased $81.3 billion (0.4%).
Personal outlays – the sum of personal consumption expenditures, personal interest payments and personal current transfer payments – increased $78.2 billion in November. Personal saving was $968.1 billion, while the personal saving rate (personal saving as a percentage of disposable personal income) registered 4.4%.
Important takeaways, courtesy of BEA:
- In November, the 0.3% increase in real PCE reflected an increase of 0.7% in spending on goods and an increase of 0.1% in spending on services. Within goods, the largest contributors to the increase were recreational goods and vehicles (led by video, audio, photographic and information processing equipment and media), as well as motor vehicles and parts (led by new motor vehicles). Within services, the largest contributors to the increase were recreation services (led by gambling, as well as membership clubs, sports centers, parks, theaters and museums).
- Overall, the PCE price index increased 2.4% year-over-year. Prices for goods decreased 0.4%, while the prices for services increased 3.8%. Food prices increased 1.4%, but energy prices decreased 4%. Excluding food and energy, the PCE price index increased 2.8% from one year ago.