Consumer Confidence Sees Unexpected Rise in November

Consumer confidence increased from 99.1 in October to 102 in November, breaking a three month streak of decreases, according to the latest data from The Conference Board. 

“Consumer confidence increased in November, following three consecutive months of decline,” said Dana Peterson, chief economist at The Conference Board. “This improvement reflected a recovery in the Expectations Index, while the Present Situation Index was largely unchanged. November’s increase in consumer confidence was concentrated primarily among householders aged 55 and up; by contrast, confidence among householders aged 35 – 54 declined slightly. General improvements were seen across the spectrum of income groups surveyed in November. Nonetheless, write-in responses revealed consumers remain preoccupied with rising prices in general, followed by war/conflicts and higher interest rates.”

The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell slightly from 138.6 to 138.2. For current business conditions, 19.8% of consumers said they were “good,” up from 18.3% last month. Additionally, 19.5% said business conditions were “bad,” up from 18.8% last month. For the labor market, 39.3% of consumers said jobs were “plentiful” (up from 37.9%), while 15.4% of consumers said jobs were “hard to get” (up from 14.1%).

“Assessments of the present situation ticked down in November, driven by less optimistic views on current job availability, which outweighed slightly improved views on the state of business conditions,” added Peterson. “More consumers said that business conditions were ‘good’ compared to last month, but more also said they were ‘bad.’ Regarding the employment situation, more consumers said that jobs were ‘plentiful’ compared to October, but the number saying jobs were ‘hard to get’ also increased. By contrast, when asked to assess their current family financial conditions (a measure not included in calculating the Present Situation Index), the share reporting ‘good’ rose, and those citing ‘bad’ fell, suggesting consumer finances remain healthy heading into the holiday season.”

The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—rose from 72.7 to 77.8 (1985 = 100). 

“Consumer expectations for the next six months recovered in November, reflecting improved confidence about future business conditions, job availability and incomes. Compared to last month, expectations that interest rates will rise in the year ahead ticked down, but consumers’ outlook for stock prices continued to weaken in November,” said Peterson.

As for consumers’ short-term business conditions outlook, 17.3% expect business conditions to improve (up from 15.5%), and 19.5% expect conditions to worsen (down from 20.9%). For the labor market outlook, 16.1% of consumers expect more jobs to be available (up from 15.3%), and 19.6% anticipate fewer jobs (down from 19.7%). For short-term income prospects, 17.2% of consumers expect their incomes to increase (up from 15.6%), and 12.1% expect a decrease (down from 13.4%). 

“Average 12-month inflation expectations receded back to 5.7% after a one-month uptick to 5.9%,” concluded Peterson. “Consumers’ views of their expected family financial situation, six months hence (not included in calculating the Expectations Index) recovered in November, after ticking down for the past two months. Buying plans for autos, homes and big-ticket appliances trended downward on a six-month basis—perhaps reflecting the impact of elevated interest rates.”

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