Consumer confidence softens, but employment figures look brighter than expected

Consumer confidence fell close to a two year low in January. The Conference Board's confidence survey fell to 87.9 (consensus 87). The decline was less than expected, and the prior month's drop was revised notably higher to 90.6 from the originally reported 88.6. These figures compare to an average of 103.2 for all of 2007. This survey is known to place a higher weight on employment indicators than other surveys. Present conditions rose to 115.3 in January from 112.9 in December. Another positive was that jobs hard to get fell to 20.1, the lowest in five months, while jobs plentiful rose to 23.9. But, future expectations for the next six months fell to 69.6 from 75.8, and the percentage of people expecting their incomes to rise over the next six months fell to 17.6 from 20.2. All age groups saw a decline in confidence, with middle-aged consumers showing the most pessimism. The highest and lowest income ranges experienced reduced confidence. Those earning between $15-35,000 saw increases. Regionally, the Pacific and northern Midwest regions saw the largest declines in optimism, while the Southeast saw the biggest improvements. Big picture, the survey indicates that employment may rebound more than expected in Friday's payroll report, but consumption is likely to remain weak. Confidence continues to weaken.