The Conference Board's consumer confidence reflects a drop in consumers' perceptions of present conditions while the outlook for about six months from now remains weak. Confidence in the economy did not improve after the end of the government shutdown in early November and confidence has deteriorated further since then.

The consumer confidence index is down 3.8 points in December to 89.1 after 92.9 in November. The December reading is below the consensus of 91.9 in the Econoday survey of forecasters. The index is the lowest since 85.7 in April when announcements about massive hikes in tariffs spooked consumers badly.

The present situation index is down 9.5 points to 116.8 in December and is the lowest since 110.0 in March 2021 when the worst of the impacts from the Covid pandemic were abating. Consumers are worried about the labor market and inflation. The expectations index is unchanged at 70.7 in December and remains at its lowest since 69.9 in June. Consumers remain concerned about future jobs and income prospects.

Four of five index components are down in December. While expected business conditions are more positive, expected personal income and employment are down. Present employment and present business conditions are also lower.

Confidence indicator expected better but still depressed at 91.9 for December after falling 6.8 points to 88.7 in November from 95.5 in October. Consumers remain worried by pocketbook issues.

The Conference Board's confidence report surveys consumers on their assessments of the labor market, business activity, and their own financial conditions. The survey is conducted by Toluna, an online community platform. (Conference Board and Toluna)

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer confidence index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.