If 2020 has been anything, it has been a roller-coaster ride of ups and downs in the economy. With worries of a possible recession looming, many have refrained from spending. However, it appears those fears have subsided in the final month of the year. Consumer confidence in the United States rose in the last month of 2020.
The Conference Board index for the U.S. economy rose by 4.1 points in December, with a reading of 88.6, a full 6 points higher than November’s revised figure of 82.6. This is the second consecutive month that the consumers of the US have exhibited a greater level of confidence in the economy.
Analysts point to the improving job market and the rollout of vaccines as the main contributors to the improved outlook. With nearly 1.4 million jobs added in the last two months alone, employers are confident in their ability to hold on to workers even if the virus and its related restrictions cause further economic setbacks. This newfound job security has spurred more consumer spending and confidence.
The boost in consumer confidence is a welcome sign that paints a positive picture of the ultimate outcome of a year that had been widely feared to end in a recession. Despite the scheduled tightening of government spending and increasing unemployment rate, consumers have taken stock of the situation and are showing optimism about their economic outlook.
Consumer confidence is seen as a gauge of the consumer’s willingness to spend freely. This will be a key indicator that the US economy is starting 2021 on the right foot. As people feel more secure in their jobs, they are more likely to make purchases that they may have otherwise held off. This could offer an economic boost for struggling businesses.
Ultimately, the better than expected consumer confidence appears to show that the US economy dodged the worst of recession forecasts. As such, this should give us all cause to celebrate as we enter 2021.