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Despite a light slate of economic releases due to many reporting agencies being closed for the holidays, there were two key announcements: lay-offs tumbled while consumer confidence kept growing.
Initial Jobless Claims
Following a sharp increase over the previous week, first-time claims for unemployment benefits filed by the recently laid off during the week ending Dec. 24 dropped to 265,000, a decline of 10,000 claims from the prior week’s total of 275,000, the Employment and Training Administration reported.
The four-week moving average — considered a steadier gauge of lay-offs — notched down to 263,000, a slight drop of 750 claims from the preceding week’s average of 263,750.
This marked the 95th straight week of initial jobless claims remaining below 300,000 claims, a level that economists consider to be an indicator of a growing job market. This is the longest such streak since 1970.
“On the whole, we continue to expect further improvement in labor market conditions,” Barclays economist Michael Gapen told the Wall Street Journal.
Consumer Confidence
Consumer confidence repeated its November increase with another gain in December. The Consumer Confidence Index grew from November’s 109.4 to 113.7 in December, The Conference Board reported last week. (A baseline of 100 was set in 1985.)
The Expectations Index, which measures consumers’ outlook on the economy’s prospects over the next six months, surged from 94.4 to 105.5. That said the Present Situation Index, which measures consumer’s outlook on current economic conditions, dropped from November’s 132 to 126.1 in December.
“Consumer Confidence improved further in December, due solely to increasing Expectations which hit a 13-year high (Dec. 2003, 107.4),” noted Lynn Franco, The Conference Board’s director of economic indicators. “The post-election surge in optimism for the economy, jobs and income prospects, as well as for stock prices which reached a 13-year high, was most pronounced among older consumers.
“Consumers’ assessment of current conditions, which declined, still suggests that economic growth continued through the final months of 2016,” she added. “Looking ahead to 2017, consumers’ continued optimism will depend on whether or not their expectations are realized.”
In terms of the overall economy, the portion of consumers reporting in December that they expected business conditions to advance during the next six months, grew from 16.4 percent to 23.6 percent, while the share of consumers saying they anticipated that business conditions would worsen dipped from 9.9 percent to 8.7 percent.
Looking at jobs, the number of consumers saying they predicted there would be an increase in jobs during coming months expanded from 16.1 to 21 percent. That said, consumers saying they anticipated jobs would shrink also increased, growing from 13.5 percent to 14 percent. Where incomes were concerned, the population of consumers saying they predicted their incomes would grow rose from 17.4 percent to 21 percent, while the percentage of consumers that said they were expecting a drop in salary fell from 9.2 percent to 8.6 percent.
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