Consumers still feel pessimistic heading into new year

How are you feeling about the economy? One closely-watched measure of consumer sentiment comes out Tuesday, The Conference Board’s consumer confidence index. Analysts expect it to tick up after a big drop in November, influenced by the government shutdown.

Between the high cost of living and low expectations for the job market, “consumers are feeling relatively unfavorable towards the economy,” said Joanne Hsu, director of Surveys of Consumers at the University of Michigan, whose own consumer sentiment index improved slightly this month, but is down more than 28% from this time last year. 

“They're feeling strain on both sides of their budgets,” said Hsu. “They remain pretty frustrated by the persistence of high prices, and they're also worried about their incomes in the year ahead.”

And most people surveyed expect the job market to get worse.

Aaron Cheris, a partner at consulting firm Bain & Company, said that’s likely to affect consumer spending.

“We’re sort of in an uncertain period for most people. And so what I suspect is that that will … particularly for discretionary purchases, continue to to be a little bit of a limiter on growth,” he said.

One thing that could lift the mood in the new year, Cheris said, is the bigger tax refunds many should see from this year’s Republican tax cuts — especially wealthier households.