By Xavier Fontdegloria


Consumer confidence in the U.S. worsened in January as concerns about the short-term outlook for the economy outweighed easing inflation pressures and strong perceptions of the labor market.

Private-research group The Conference Board said Tuesday that its consumer confidence index came in at 107.1 in January, down from an upwardly revised 109.0 in December.

The reading misses economists' forecasts in a poll by The Wall Street Journal, who expected confidence to improve to 109.5.

The decline in confidence was driven by the expectations index, which gauges short-term outlook for income, business and labor-market conditions. The indicator decreased to 77.8 in January from 83.4 in December, partially reversing December's gain and under the 80 threshold that often signals an economic recession within the next year.

The retreat in the expectations index reflects consumers' concerns about the economy over the next six months, said Ataman Ozyildirim, senior director at The Conference Board. "Consumers were less upbeat about the short-term outlook for jobs. They also expect business conditions to worsen in the near term," he said.

Income expectations were broadly stable, likely due to falling inflation. Purchasing intentions for autos and appliances also held steady, but fewer consumers said they are planning to buy a home, Mr. Ozyildirim said.

Meanwhile, the present situation index--which gauges consumers' assessment of current business and labor market conditions--rose to 150.9 from 147.7 a month earlier.

Assessment of both current business conditions and the labor market improved, according to the survey. Around 48% of consumers said jobs were plentiful, up from 46.4% in December, while 11.3% of respondents said jobs were hard to get, less than the 11.9% they said so a month earlier.

Easing inflation prints have helped boost consumer confidence in recent months. U.S. inflation slowed in December to 6.5%, its lowest level since late 2021. Meanwhile, the job market has been resilient even as the economy slowed.

"We expect some upside risk to consumer confidence in the near term as inflation comes down on a year-on-year basis and the labor market continues to be tight," economists at Citi said ahead of the data release.


Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com


(END) Dow Jones Newswires

01-31-23 1036ET