Consumer Confidence at a Level Not Seen Since 2000

Consumer confidence dipped slightly in December, but recovered in January and remains at an extremely high level, according to The Conference Board’s January Consumer Confidence Survey. The composite value of consumer confidence in January was 125.4, up from 123.1 in December. Last July, the composite reached 120 for the first time since November 2000 and has been above that level ever since. The three-month moving average (3MMA) decreased from 126.0 in December to 125.7 in January, which was 18.3 points higher than in January last year. Consumer confidence is a driver of consumer spending, which is the largest component of GDP and ultimately drives a large portion of steel consumption.

In January, the 3MMA of the composite decreased by 0.27 points to 125.7 points. We prefer to smooth the data with a moving average because of monthly volatility, which in the case of consumer confidence has been quite extreme since the beginning of 2016. The composite index is made up of two sub-indexes. These are the consumer’s view of the present situation and his or her expectations for the future. Both are now above their eight-year trend line (Figure 1).