UPDATE: Conference Board's Consumer Confidence Index reports confidence fell in December
Shoppers stand outside Topshop on Oxford Street on in London, England seeking post-holiday deals.
TEXT OF INTERVIEW
STACEY VANEK SMITH: It was a good holiday season for retailers and everyone was saying that the U.S. consumer was back. So you can understand everyone's surprise about an hour ago with the Conference Board's Consumer Confidence Index reported confidence fell in December.
Here to talk about this with us is out own Mitchell Hartman. He joins us live. Good morning, Mitchell!.
MITCHELL HARTMAN: Hi Stacey.
VANEK SMITH: Is this some kind of retail hangover? Why is confidence down when we saw a return to pretty robust holiday spending?
HARTMAN: Now, it may turn out to be a blip -- the survey was done right around the time some really depressing job-creation numbers came out earlier this month. That may have put people in a lousy mood when they were answering the Conference Board's questions. Several reports this week are showing consumers were spending 4, maybe 5 percent more on gifts and entertainment than last year. It may turn out to be a record year for sales. And another measure of confidence in December was actually up.
VANEK SMITH: So, then should we be optimistic for 2011, then? Will confidence be regained in the new year?
HARTMAN: I asked Bernard Baumohl at the Economic Outlook Group this question. He's usually pretty bullish, and for the most part he isn't concerned consumers will turn pessimistic. He does have one worry though.
BERNARD BAUMOHL: If gas prices keep climbing substantially above the $3.00 barrier into $3.50 moving closer to $4.00, I think that will have an impact on consumer confidence because that will obviously hurt companies and household finances too.
HARTMAN: But even if gas prices don't spike, economists say lousy job numbers and the poor housing market will continue to bum out consumers.
VANEK SMITH: Mitchell Hartman, thank you.
HARTMAN: You're welcome.
Consumer confidence expected to be up in December
TEXT OF STORY
JEREMY HOBSON: As we close 2010 economists will be focused on the consumer. We'll get data this morning on how confident consumers are. And the early word is we're getting more confident.
Marketplace's Mitchell Hartman is here live with the details.
MITCHELL HARTMAN: Hi, Jeremy.
HOBSON: So first of all I heard yesterday that the big East Coast blizzard might have affected retail sales. Consumers are staying home. Will that be reflected in the numbers today?
HARTMAN: You know, we won't know for a while. It may just be people will show just as much over the next few days once they've dug out from the snow. MasterCard is reporting sales from early November through Christmas Eve were up 5.5 percent over last year. That's pretty good, especially if you're a retailer and you remember 2008 which was dreadful and 2009 which was barely passable. Now, a lot of that is as much about prices as anything else. Look, people have been saving, rather than spending, for more than two years. There's HUGE pent-up demand in the economy now. Plus, discounting is rampant.
HOBSON: So are consumers more confident right now, Mitchell?
HARTMAN: Yes, at least somewhat. The Conference Board's index of consumer sentiment has been rising for five months. But economist Chris Christopher at IHS Global Insight himself isn't so optimistic.
CHRIS CHRISTOPHER: So compared to other recoveries, it's still at depressed levels. We have a very bad housing market. The unemployment rate is very high. Gas prices are high. So the only really good news we have that drives consumer confidence recently has been the stock market.
So you know we've been watching our pocketbooks for sure. In 2011 we may all be feeling a bit freer with the money. We'll see 2 percent more in our paychecks starting in January from the new payroll tax cut.
HOBSON: That's right. Marketplace's Mitchell Hartman, thanks so much.
HARTMAN: You're welcome.