The Conference Board Global Consumer Confidence Index, conducted in collaboration with Nielsen, was unchanged in Q4 2019 at 107 (a reading of 100 or above is considered positive). The index has been relatively flat in recent quarters, despite hovering at historically high levels for more than a year.

"The continued lack of momentum in global consumer confidence raises concerns about the durability of consumer spending as a major source of growth in 2020," says Bart van Ark, Chief Economist of The Conference Board. "While The Conference Board projects global economic growth to improve slightly to 2.5 percent in 2020—up from 2.3 percent in 2019—we should not take it for granted that consumer spending will continue to prop up the economy. Increased investment, an improvement in manufacturing production and trade, and more productivity growth are critical elements of a growth recovery."   

Out of 64 markets surveyed, 30 of them (14 emerging and 16 mature) saw a decline in consumer confidence. This is a slight improvement from last quarter, when 33 markets saw a decline (14 emerging and 19 mature). However, confidence weakened in several larger economies (including China, Germany, Japan, Mexico, Russia, and Turkey), offsetting gains in other regions.

Consumer confidence remains highest in Asia-Pacific and North America. However, while consumer confidence in the US modestly improved over the previous quarter, it weakened in several Asian markets, including those in China, Japan, and Southeast Asia. Consumer confidence in the Euro Area is well below 100 but remained unchanged relative to previous quarters. Confidence declined in Germany, Italy and Spain, but improved in France. Consumer confidence faces challenges in Latin America but has been strengthening in the Gulf Region.

Consumer Caution on the Rise
"Strong labor markets, rising wages, and low consumer price inflation supported consumer spending in 2019," says Elizabeth Crofoot, Senior Economist, The Conference Board. "An intensification of concerns about job security and personal financial well-being, especially if combined with lingering geopolitical uncertainties, may erode consumers' confidence in the economy and cause them to rein in their spending."

Consumer concerns that the economy is in recession (in their market) have visibly increased in Asia-Pacific and Europe over the past year, but eased slightly in North America and Latin America. Labor markets are tightening in many economies, and the number of additional jobs created is slowing. This slower job growth is reflected in increasing consumer concerns about job prospects. Wages have not risen as rapidly as expected, and consumers, especially less affluent ones, are therefore slightly more concerned about personal finances. And while low inflation in most markets—but not all—makes this a good time to spend, such favorable conditions will not last forever.

European Confidence Wavers Amid Increasing Economic, Political Uncertainties
For the third consecutive quarter, an increasing number of European markets are seeing declines in confidence. Of the 34 European markets surveyed, more than half (18) saw a decline in consumer confidence in Q4, up from 15 in the third quarter. In the Euro Area, nearly two-thirds (10 of 16) of markets saw a decline in confidence, up from 8.

Because the global industrial downturn is driving a softening in Europe's economic outlook, the onus will fall on consumer spending to continue to drive growth. Low inflation and ultra-low interest rates across many European markets should somewhat cushion the European consumer.

Consumer confidence in the UK climbed for the second consecutive quarter, driven by improved sentiment about future job prospects and personal finances in the next 12 months. However, current spending intentions declined. Retail sales softened in November 2019 during the holiday shopping season. The December general election may have reduced uncertainty surrounding Brexit and buoyed consumer confidence. However, weakening retail spending raises concerns about whether the consumer can continue to support the economy in early 2020, especially as employment and wage growth have shown signs of weakening. 

North America: Consumer Spending Remains Driver of Growth, But Bears Watching
Consumer confidence in the US climbed modestly, nearing its historic high of 123. The increase was primarily driven by improved sentiment about job prospects and spending intentions. A strong labor market with low unemployment and rising wages have kept Americans spending throughout 2019.

In an overall slow-growth environment, consumer spending has been the engine of growth. However, growth in real consumer spending is expected to slow to 2.7 percent in the first half of 2020. In the months ahead, several risk factors will weigh on the ability of consumers to propel the economy forward, including slowing employment growth; slowing wage gains, which have stalled at about 3 percent; and, in the wake of manufacturing weakness during 2019, possible layoffs in that sector. A potential waning of consumer spending bears watching in the near term.

Consumer confidence in Canada declined modestly. Optimism about future job prospects fell the most because of a sudden spike in unemployment from 5.5 percent in October to 5.9 percent in November 2019. As in the US, Canadian consumers have bolstered economic growth throughout the year amid low inflation and unemployment. However, slowing consumer demand, the recent uptick in joblessness, and rising delinquencies on consumer debt may start to curb spending. 

Latin America: Economic, Political, Social Concerns Continue to Impact Confidence
Consumer confidence in Latin America softened slightly but has remained generally stable over the last several quarters. The largest declines globally were recorded for Chile and Mexico, with Chile's level of confidence dropping well below that of the troubled economies of Argentina and Venezuela. Argentina, Chile, Costa Rica and Mexico saw declines in all three drivers of consumer confidence (job prospects, personal finances, and spending intentions).

Economic and political uncertainties due to slowing foreign demand, contentious government elections, and widespread protests continue to work against the recovery of the most fragile Latin American markets and will likely continue to undermine consumer confidence.

After a sharp drop in mid-2019, consumer confidence in Brazil increased for the second consecutive quarter and nearly returned to levels of a year ago. Brazilian consumers stand among the most confident in the region, spurred by large improvements in job prospects and spending intentions. Despite a modest decline in the fourth quarter, two-thirds (66 percent) of Brazilian consumers still feel optimistic about their personal finances over the next 12 months.

Mexican consumer confidence declined sharply due to worsening sentiment about job prospects, personal finances, and spending intentions. After hovering around 100 for several quarters, the index dropped to 90, although it is still slightly above its historical average value (88).