Consumers were feeling confident in January: The job market was chugging along and oil prices were down. But, according to an Associated Press report, their optimism may dwindle on concerns that job and wage growth may slow.
The Conference Board, a private research group, said Tuesday (Jan. 30) that its Consumer Confidence Index edged up to 110.3 in January from a revised 110.0 in December. Analysts had expected a reading between 110.0 and 110.5.
The January index was the highest in five years, suggesting that consumers will continue to be the engine behind the nation’s economic growth in coming months.
At the same time, a measure of consumer expectations for the next six months dropped to 94.5 in January from 96.3 the month before.
Lynn Franco, director of the board’s consumer research center, said that “looking ahead … consumers are not as optimistic as they were in December.” As a result, the index suggests just “moderate improvement” in economic growth in early 2007.
This should ease fears at the Federal Reserve, which is meeting Tuesday and Wednesday to review its economic policy, said Anthony Chan, managing director and chief economist with JPMorgan Private Client Services in New York.
“At the central bank, they’re mainly concerned about the economy overheating,” Chan said. “I think this report says they can sit and watch.”
Still, he said, the economy will benefit in the short run from continued consumer spending because the latest figures “tell us that at the moment, the consumer is in a sweet spot thanks to improved labor market conditions and lower oil prices.”