American consumers felt more optimistic about the economy heading into the last weeks of the holiday season, despite higher inflation and rising Covid-19 case counts.
The Conference Board, a private research group, said its consumer confidence index rose to 115.8 in December from 111.9 in November.
The survey found that concerns about inflation declined as did concerns about Covid-19, however the report may not fully reflect the recent rise in cases driven by the Omicron variant. The Conference Board normally publishes the consumer confidence index on the last Tuesday of every month, and released this report nearly a week earlier than usual because of the holidays, with a cutoff date of Dec. 16 for responses.
December is a key month for holiday spending and travel, and consumer-confidence readings help gauge Americans’ willingness to spend on goods and services, a major driver of the U.S. economy.
Rachel Murray, a high-school teacher based in Austin, Texas, said that she is paying close attention to inflation and the latest Covid-19 wave but is still feeling relatively optimistic about the path of the economy.
“We do seem to keep on rolling along…I’m still feeling hopeful that we have the resources now, we kind of know the drill to get through this,” the 59-year-old said.
Still, Ms. Murray said she is “definitely holding off on major purchases, I’m trying to be super careful because I know my money’s not going to go as far,” due to inflation.
Despite December’s improvement in sentiment, the Conference Board’s index remains well below levels seen in the early summer, before the Delta variant began to grip the U.S.
Last week, the Commerce Department reported that retail sales rose modestly at the start of the holiday season, as shoppers faced rising inflation and supply shortages, and some snapped up gifts earlier than usual.
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Stephen Stanley, chief economist at Amherst Pierpont Securities LLC, said Americans’ wherewithal to spend remains high, as many households have saved money during the pandemic. However the latest wave of the Omicron variant could limit opportunities to spend.
Some of the most popular shows on Broadway, including “Hamilton” and “The Lion King,” have canceled performances through Christmas due to Covid-19 outbreaks.
“Areas of spending where there’s high [person-to-person] contact are going to wane,” Mr. Stanley said, although likely not as much as in previous Covid waves. “People are figuring out more and more how to deal with this and getting on with their lives, so to speak,” he said.
Write to Harriet Torry at [email protected]
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