Here is the note that JPMorgan economists sent to clients regarding the latest consumer confidence report. JPMorgan’s assessment: gloomy.
The Conference Board consumer confidence index fell to a new all-time
low of 38.0 in December, just surpassing the previous all-time low of
38.8 that was set in October. The labor market details were also very
weak. The labor market differential—the difference between the share of
respondents saying jobs are plentiful and those saying jobs are hard to
get—fell to -35.8% from -28.4%, one of the larger declines on record.
This combined with a rise in continuing claims suggests that the
unemployment rate will hit 7.0% in December, up from 6.7% in November.
· The drop in confidence this month is particularly notable given that
nominal gas prices have recently fallen to their lowest level in almost
· The present situation index declined to 29.4 from 42.3 and is at its
lowest level since April 1992. The expectations index declined to 43.8
from 46.2, though it is still above the all-time low of 35.7 that was
set in October. All components of these two indices were weaker.
· Buying plans improved slightly in December but were still quite weak.
The share of people planning to buy a car within the next six months
rose to 4.7% from 3.8% (the all-time low); the share planning to buy a
home increased to 2.5% from 2.1% (the lowest since 1982); and the share
planning to buy a major appliance increased to 26.2% from 24.5% (the
lowest since 1995).