Consumer Confidence Falls in November Amid Inflation

New York—U.S. consumer confidence fell in November as inflation pushed prices higher.

The Conference Board’s consumer confidence index fell to 109.5 in November from 111.6 in October, falling short of analyst estimates of 110.

It marked the fourth decline in the past five months, and its lowest level in nine months.

The consumer price index, which measures the average change in prices over time consumers will pay for a basket of goods and services, rose nearly 1 percent month-over-month in October and more than 6 percent year-over-year, marking the highest jump since 1991.
 
But, despite rising costs due to inflation and low consumer sentiment, consumers have continued to spend, with retail sales in October surpassing analyst expectations.

“Expectations about short-term growth prospects ticked up, but job and income prospects ticked down. Concerns about rising prices—and, to a lesser degree, the Delta variant—were the primary drivers of the slight decline in confidence,” said Lynn Franco, senior director of economic indicators at The Conference Board, in a press release announcing the results. 

Consumers were less than optimistic about their current financial prospects.
 
The Present Situation Index, which measures consumers’ outlook on current business and labor market conditions, fell to 142.5 from 145.5 last month.

Consumers’ appraisal of current business conditions was less favorable in November.

The percent of consumers who said current business conditions are “good,” decreased to 17 percent month-over-month from 18.3 percent. Those who said conditions were “bad” increased to 29 percent, compared with 25.7 percent in October.

As for the labor market, consumers had mixed feelings, with 17 percent of respondents saying jobs are “plentiful,” compared with 18.3 percent last month.

However, 11.1 percent said jobs are “hard to get,” nearly unchanged from 11 percent in October.

The Expectations Index, which measures consumers’ short-term outlook for income, business, and labor market conditions, fell to 87.6 from 89 last month.
 
Consumer optimism was somewhat buoyed when looking to the short term, with the percentage of consumers expecting short-term business conditions to improve over the next six months increasing to 24.1 percent from 22.7 percent.

Consumers’ optimism about short-term business conditions also increased in November; fewer expect business conditions to worsen, down to 20.7 percent from 21.9 percent last month.
 
Looking at the short-term labor market, 22.1 percent consumers expect to see more jobs in the months ahead, down from 24.4 percent.
 
The percentage of consumers expecting to see fewer jobs increased to 18.9 percent, compared with 18.7 percent last month.
 
The percentage of consumers expecting an increase in short-term income decreased to 17.9 percent from 18.4 percent. More consumers expect their incomes to decrease—12 percent said they expect a decline, which is up from 11.2 percent.
 
“The Conference Board expects this to be a good holiday season for retailers and confidence levels suggest the economic expansion will continue into early 2022,” Franco said. 

She noted both confidence and spending will likely have to battle rising prices and a possible rise in COVID-19 cases in the coming months.