The Conference Board reported that the Consumer Confidence Index unexpectedly fell from 54.3 in November to 52.5 in December, well shy of the estimate offered up in a survey by Bloomberg of 57.4.
Lynn Franco, Director of the Consumer Research Center at The Conference Board, said, “Despite this month's modest decline, consumer confidence is no worse off today than it was a year ago.
“Consumers' assessment of the current state of the economy and labor market remains tepid, and their outlook remains cautious. Thus, all signs continue to suggest that the economic expansion will continue well into 2011, but that the pace of growth will remain moderate."
Weekly jobless claims have dropped in recent months, but the unemployment rate, which remains stubbornly high, appears to be hampering consumer confidence, as the assessment of the labor market was less favorable than last month.
Those saying jobs are "plentiful" decreased to 3.9% from 4.3%, while those stating jobs are "hard to get" edged up to 46.8% from 46.3%, according to data from the Conference Board.
Although the has been a lack of progress in the survey that measures sentiment, consumers have been boosting spending (see Rising retail sales signal a brigher recovery) and forecasters found themselves raising estimates for the 2010 holiday shopping season.
Further, Congress recently extended the Bush-era tax cuts and passed a partial social security tax holiday next year, which has all but eliminated talk that the Fed may implement another round of quantitative easing.
Obstacles to a stronger recovery remain, including still-tight lending standards, sovereign debt worries in Europe and a weak housing market. However, growth has picked up following a lull during the summer and most signs point to continued progress.
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