US Consumer Confidence Boosts Despite Rising Omicron Cases

US Consumer Confidence Boosts Despite Rising Omicron Cases

U.S. consumer confidence saw a boost this month as it seemed Americans brushed aside their fear of the highly infectious Omicron variant of coronavirus and the inflation.

The Conference Board, a private research group, said on Wednesday that its consumer confidence index — which calculates prevailing business conditions and expected developments for the coming months — rose to 115.8 in December, up from 111.9 in November.

The consumer confidence report has come at a time when the Omicron Variant of Covid-19 has become a dominant variant in the U.S., and the holidays are just around the corner.

The research found out that consumers’ opinions about current conditions shifted somewhat, but their outlook for six months from now looks brightened.

The Present Situation Index, which considers the consumers’ assessment of current business and labour market conditions, stood relatively flat at 144.1 this month, down from 144.4 reported in November.

The Expectations Index, which calculates consumers’ short-term outlook for income, business, and labour market conditions, is anticipated to jump to 96.9 from 90.2.

“Despite high inflation and the rising Omicron wave, consumers are bullish on 2022,” said Robert Frick, an economist with Navy Federal Credit Union. “This reflects growing economic momentum, as job openings remain high and prices are dropping at the pump. This is further evidence that consumer spending will keep rising and be the main factor fueling the expansion.”

Consumers’ optimism about the short-term business conditions outlook improved in this month. The survey found that 26.7% of consumers see betterment in business conditions, while 17.9% of the consumers held a pessimistic view about the business conditions prevailing in the first half of 2022. 

Also, the majority of the consumers seemed more optimistic about the short-term labour market outlook. 25.1% of consumers expect more job availability in the next six months, while 14.8% anticipate fewer jobs.

“Looking ahead to 2022, both confidence and consumer spending will continue to face headwinds from rising prices and an expected winter surge of the pandemic,” said Lynn Franco, the Conference Board’s senior director of economic indicators.

The Commerce Department, last week, reported consumer spending slowed down from October to November, but the spendings rose modestly ahead of the holidays despite inflation and widespread shortages. Notably, the November retail sales report did not include the possible impact from Omicron, which emerged in late November.

The monthly Consumer Confidence Survey usually comes on the last Tuesday of every month. However, this time, the report has arrived earlier than usual because of the holidays, with a cutoff date of Dec. 16 for the preliminary results.