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Consumer confidence takes surprising dip in Dec.
ANN ARBOR, Mich. (1/21/14)--A preliminary measure of consumer confidence retreated slightly in January, raising doubts about the resilience of the recovery's recent strength.
 
The Thomson Reuters/University of Michigan preliminary index of sentiment dropped by 2.1 points to 80.4 from 82.5. Moody's predicted that the measurement would expand by more than a point, while a Bloomberg poll of economists forecast a one-point advancement (Economy.com Jan. 17, Bloomberg.com Jan. 17).
 
The component gauging current conditions fell by 3.4 points to 95.2, while the input measuring economic outlook fell by 1.2 points to 70.9.
 
The monthly survey also revealed that Americans' expectations about short-term inflation are unchanged--respondents collectively predicted prices to rise 3% over the next 12 months.
 
Expectations about price increases over the next five years were up slightly, to 2.9% from 2.7%.

January's reading comes after the weakest monthly job growth reported since January 2011. A Labor Department report showed the economy adding just 74,000 jobs at the end of 2013 after a 241,000 expansion in the payrolls in November. The unemployment rate receded to 6.7% from 7%, but that was largely due to a labor force contraction, according to Bloomberg.
 
The research firm and news service said that the initial January survey is consistent with its Consumer Comfort Index, which fell for the week ending Jan. 12.
 
Bloomberg said that rising equity prices and household values, however, are keeping consumer expenditures up.
 
Moody's echoed that assessment and pointed out additional reasons economic growth doesn't appear to be on the verge of a significant slowdown. Reports indicate that manufacturing firms are increasing output, which should boost an improved housing market throughout 2014.
 
The preliminary decline in January does not entirely erase the 7.4 point December gain in the Thomson Reuters/University of Michigan index, either. Moody's is still predicting that payrolls will expand by 2.75 million in 2014, and 3 million in 2015, and the economy will reach full employment by late 2016.
 
In the five years before the official start of the Great Recession in December 2007, the index averaged 89. Throughout the 18-month-long decline of GDP, the measure averaged 64.2, according to Bloomberg.


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