Ahead of 2019, Why American Consumers Are More Worried About the Economy

Despite a series of upbeat holiday reports, a stock market rally just ahead of the year’s end and a few solid macroeconomic indicators, American consumers may be growing skittish as they enter 2019.

In its monthly report, released today, not-for-profit research group The Conference Board found U.S. consumer confidence decreased in December following a modest decline in the month prior. The index now stands at 128.1, down from 136.4 in November, as consumers demonstrate mounting fears that some robust economic trends — such as record low unemployment and affordable gas prices — will start to temper in the new year.

“Expectations regarding job prospects and business conditions weakened but still suggest that the economy will continue expanding at a solid pace in the short term,” said Lynn Franco, senior director of economic indicators at The Conference Board. “While consumers are ending 2018 on a strong note, back-to-back declines in expectations are reflective of an increasing concern that the pace of economic growth will begin moderating in the first half of 2019.”

Also illustrating that same trend: The Conference Board’s Present Situation Index, based on consumers’ assessment of current business and labor market conditions, and the Expectations Index — based on consumers’ short-term outlook for income, business and labor market conditions — declined this month. The former dipped only slightly, from 172.7 to 171.6, but the latter tumbled from 112.3 last month to 99.1 this month.

A partial government shutdown last week, the Federal Reserve’s decision to increase interest rates this month and the tumultuous trade dispute between the U.S. and China are undoubtedly adding to consumer uncertainty. Although it eventually rebounded, the stock market this week logged the worst Christmas Eve trading period ever recorded, with the Dow sinking more than 600 points and the S&P approached bear market territory.

And Americans appear to be watching the volatility closely: The Conference Board also said today that consumers’ assessment of current conditions declined in December, with the percentage of those saying business conditions are “good,” decreasing from 42 percent to 37.2 percent.  In tandem, those claiming business conditions are “bad” increased from 10.7 percent to 11.3 percent.

Still, where retail is concerned, experts have said there is hope that the 2018 rebound of traditional retailers like Macy’s, Kohl’s, Walmart and Target can continue into the New Year if companies continue to ramp up their experiential offerings and convenient omnichannel features such as buy online and pick up in store.

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