Americans expressed a bit less optimism about the economy this month after their confidence soared to a 15-year high in December.
The Conference Board, a business research group, reported Tuesday that its consumer confidence index slipped to 111.8 in January from a December reading of 113.3, which had been the highest since August 2001. Americans overall have been in a sunny mood since the Nov. 8 election of Donald Trump ended a divisive presidential campaign and increased the odds of a tax cut.
The index measures consumers’ assessment of current conditions, which improved in January, and their expectations for the future, which fell.
Americans were somewhat less optimistic about the outlook over the next six months for business conditions, jobs and the prospect that their own incomes will rise.
Economists closely monitor consumers’ mood because their spending accounts for about 70 percent of U.S. economic activity. The Commerce Department reported Monday that consumer spending rose in December at the fastest pace in three months.
“With employment growth still solid, wage growth starting to pick up and the prospect of big income tax cuts later this year, there is every reason to expect spending growth to strengthen over the coming months,” Andrew Hunter, U.S. economist at Capital Economics, wrote in a research note.
A solid labor market is supporting the relatively rosy outlook. Americans’ paychecks rose last month at the fastest pace in more than seven years as employers paid more to attract and keep workers. The unemployment rate was 4.7 percent in December, up from November’s nine-year low of 4.6 percent but still close to what economists consider full employment.
The economy generated 180,000 jobs a month last year, healthy but down from 229,000 a month in 2015.
Economic growth slowed in the last three months of 2016 to an annual rate of 1.9 percent, weighed down by what is expected to be a temporary drop in exports.