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October 22, 2019

US consumer confidence index rose strongly in January

US consumer confidenceThe US consumer confidence index rose to 125.4 points in January, which is above expectations for an increase of 123.1 points, shows a Conference Board study. The index measuring the current moods of the US consumers is slightly down. At the same time, the index of future consumer expectations for economic activity over the next six months increased from 100.8 points in the past month to 105.5 points this month.

“The consumer’s assessment of the current situation is slightly decreasing, but remains at historically high levels. The expectations are improving, although consumers are not sure about their income prospects in the coming months, which may be the result of uncertainty about the impact of tax reform”, said the director of the Conference Board study, Lynn Franco.

According to him, overall, the consumers remain fully confident that the steady growth rate observed at the end of 2017 will continue this year.

However, consumer moods are mixed when assessing business conditions in the country. The percentage of people setting business conditions as “good”, but slightly decreased from 35.8% to 34.9% in January. At the same time, the proportion of people setting business conditions as “bad” rose slightly from 11.7% to 12.7%.

For analysts, the consumer confidence data is extremely important, as it increases the survey’s indexes and signals an expected rise in household spending, which accounts for 70% of US economic activity.

Meanwhile, last week, data on the US economy were released showing that the growth rate in the fourth quarter was surprisingly slowing down in the fourth quarter of 2017, after the sharpest increase in consumer spending in three years led to a surge in imports. The gross domestic product rose by 2.4% on an annual basis, falling below expectations of a 3% jump. For comparison, in the third quarter, the GDP growth was 3.2%.

Though slower than expected, the economy is growing due to the good performance of private consumption as well as the higher spending of the federal government. The investment also gives impetus to business, as consumer spending rose by 3.8%.

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