November's reading had been a disappointment for the Consumer Confidence Index following a post-recession high of 94.5 for October. The Present Situation Index jumped up to 98.6 in the latest reading from its November level of 93.7, while the Expectations Index fell slightly from 89.3 down to 88.5.
"Consumer confidence rebounded modestly in December, propelled by a considerably more favorable assessment of current economic and labor market conditions," said Lynn Franco, Director of Economic Indicators for the Conference Board. "As a result, the Present Situation Index is now at its highest level since February 2008 (Index, 104.0). Consumers were moderately less optimistic about the short-term outlook in December, but even so, they are more confident at year-end than they were at the beginning of the year.”
The main drivers of the increase in consumer confidence for December were consistently falling gas prices and well-received employment reports, according to Chris Christopher, Director of U.S. Consumer Economics for IHS Global Insight. With the nation's unemployment rate at a six-year low of 5.8 percent, the percentage of people surveyed who said they believe jobs are "plentiful" increased from 16.2 percent in November to 17.1 percent in December. The percentage who said they believe jobs are "hard to get" declined slightly from 28.7 percent in November to 27.7 percent in December.
Christopher said he sees the increases reported in the latest survey as a positive sign for the holiday season, since the cutoff date for the survey was December 16.
"Consumer spending is likely to end 2014 on a high note and is also looking bright for 2015," Christopher said in his analysis of the survey. "We expect 2015 real consumer spending growth to outpace 2014, and real median household income is likely to gain some traction in the New Year. This is good news for middle income households since between 2008 and the end of 2013 most of the income gains have been in the upper income brackets."
Meanwhile, the percentage of people surveyed said business conditions were "good" stayed the same from November to December, the percentage who said business conditions were "bad" dropped from 21.8 percent to 19.6 percent. Consumers' outlook for short-term economic improvement was slightly less positive, however; the percentage who said they expect business conditions to improve in the next six months dropped slightly down to 18.0 percent in December from 18.3 percent in November. The percentage who expect more jobs in the months ahead also nudged slightly downward from 15.5 percent to 14.7 percent, while the percentage expecting fewer jobs fell from 16.9 percent to 16.1 percent