Unexpected Consumer Data: a Climb in Confidence for January | Episode 095 | 01-30-2024

Megan Horneman, Chief Investment Officer at Verdence Capital Advisors, looks into the surprising consumer confidence report in today's episode. Exceeding analyst expectations, the present situation confidence hit its highest level since 2020, while future expectations reached a six-month high. Megan talks about the key components, including the job market, revealing a significant shift in perception. Notably, lower-income brackets showed the most confidence, contrasting with a decline in confidence among those earning over $125,000 annually. Stay tuned for more insights this week, including the FOMC rate decision, ISM, and the January jobs report. For questions or comments, reach out to podcast at Verdence dot com. 

Watch today's episode here: 

Hello, this is Megan Horneman and the Chief Investment Officer for Verdence Capital Advisors. We're coming to you today, on Tuesday, January 30th, to discuss some of the economic data we got this morning, specifically on the first read we've gotten from the consumer for the year 2024. We got consumer confidence from the conference board for the month of January and this was a big surprise to the upside. This beat to analyst expectations for what the consumer confidence would be. There's a couple different components to this the confidence on the present situation that was actually the highest level that we've seen since 2020. And then for the consumer confidence on future expectations on the economy, that was the highest we've seen six months. Some other components in there that we like to look at is the jobs that are plentiful versus hard to get. This is saying that there's consumers feel more confident that there's plenty of jobs out there versus the other side of that, where their job's hard to get, and that actually saw a pretty big jump for the month as well. This is again, it was a much bigger surprise than we had anticipated, but having some better confidence coming into the year, it doesn't necessarily surprise us, given what we've seen with the equity markets being up, with the growing optimism that the Fed's going to be cutting interest rates, that the economy has this perfect soft landing, so some jump in this consumer confidence isn't surprising, given those things. But what is surprising to us is when we look at all the different breakdowns, whether it's from income level or from age level and all different age groups, that the conference board looks at these also on increase. When it comes to the income level, the biggest increases in consumer confidence in were those lower income levels those under 15,000, those earning under 25,000. The only area from an income perspective that saw a decline in consumer confidence for the month was those that earn more than $125,000 a year. So that was a bit surprising to us. And the other thing that surprises us is that this doesn't really go along with some of the other polls we've seen specifically going into this election year, where the economy is one of the top concerns with most voters. So where is this consumer confidence coming from? We're not exactly sure, but we'll continue to monitor this because it does have a pretty good correlation with consumer spending. So we'll see if consumers can continue to spend as we get into this year.

We have a lot more this week. It's a very busy week from an economic data perspective. Tomorrow we'll get the FOMC rate decision that's on the 31st. On Wednesday, then we will also get ISM on Thursday and we'll get the jobs report on Friday. This will be the jobs report for January. This morning we did get the Jolt's job opening, which was actually a bit higher than anticipated, so that brought some optimism into the market as well. That's all we have. We'll be back with plenty more to discuss this week. If you have any questions or comments, please feel free to reach out to podcast at Verdence dot com. Thank you.