Americans' confidence in the economy remains at 12-month lows, according to the Consumer Confidence Index released today by the Conference Board. The Index now stands at 87.9, after rising briefly in December. The Expectations Index, which measures their confidence that things will get better, declined to 69.6 from 75.8.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: "Consumers' appraisal of current business conditions is becoming more negative... Looking ahead, consumers are quite downbeat about the short-term future and a greater proportion expect business conditions and employment to deteriorate further in the months ahead. In addition, the percentage of consumers anticipating an improvement in their earnings has declined and could potentially impact spending decisions." (Source: Conference Board, Consumer Confidence Index, January 29, 2008)

What It Means to You

The Consumer Confidence Index is a lagging indicator. This means that most people don't feel the impact of what is happening with the economy until after it has already happened. If you look at the chart, the Consumer Confidence Index has been falling since July. So has the housing market. This means that consumers ignored the fairly upbeat Q3 GDP report, and focused instead on their declining home equity and feeling of wealth. Watch for upcoming retail and consumer spending reports to determine if this will impact their spending habits, upon which 70% of the U.S. economy depends.

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