The Conference Board’s Consumer Confidence Index, a survey that captures future spending of U.S. households dropped this month to 113.8 and follows a 115.8 value for December. “Consumer confidence moderated in January, following gains in the final three months of 2021,” said Lynn Franco, senior director at the Conference Board. The Present Situation Index, which is based on consumers’ sentiment of current business conditions and the labor market, increased to 148.2 from 144.8 in December. The proportion of consumers planning to purchase homes, automobiles, and major appliances all increased. The Expectations Index, which measures consumers’ short-term outlook for income, business, and the job market declined to 90.8 as compared to last month’s 95.4%. The share of consumers that expected more jobs to be available dropped to 22.7%, from 24.2%. The percentage of consumers who said business conditions will improve came in at 22.8%, down from December’s 25.4%.

The Commerce Department’s first estimate on fourth-quarter gross domestic product (GDP) growth reported the economy expanded at an annual rate of 6.9%. The first estimate is well above the unrevised 2.3% growth in the third quarter.  A jump in private inventories contributed 4.9 percentage points to the headline 6.9%, as companies (led by motor vehicle dealers) worked to replenish supplies depleted by the pandemic.  A jump in consumer spending during the holiday season also helped contribute to the headline number.  Government consumption expenditures subtracted about half of a percentage point as defense spending and COVID-related government assistance payments declined.  Full-year GDP expanded 5.7% in 2021, the strongest showing since 7.2% in 1984, and follows a 3.4% contraction in 2020.  Inflation showed as the GDP price index climbed by 6.9% — the most since 1981, and well ahead of the third quarter’s 5.6%. Core personal consumption expenditures increased 4.9%, as compared to the third quarter's 4.6% reading.

The U.S Census Bureau reported that new orders for durable goods fell 0.9% to a seasonally adjusted $267.6B in December. The decrease follows two consecutive monthly increases and is the biggest month-over-month drop since April 2020.  Affecting the headline number was a drop in commercial aircraft (-14.4%) and communications equipment (-5.9%). Core capital goods orders which exclude aircraft and military hardware and is a proxy for business investment in equipment was little changed following a revised (+0.3%) in November. Orders for motor vehicles reported an increase of 1.4% and is up 0.4% YoY.  Core durable order which excludes transportation increased by 0.4% and is up 11.9% YoY. Unfilled orders for manufactured durable goods which is a measure of backlogs increased 0.5%.  Inventories increased 0.7% in December and follows a 0.8% increase in November. Orders for defense capital goods dropped 28.4%, the volatile component is up 3.4% YoY