After an increase in October, consumer confidence decreased in November, and now stands at 109.5, down from 111.6, the Conference Board reported Tuesday, Nov. 30. The Present Situation Index, which is based on consumers’ assessment of current business and labor market conditions, fell to 142.5 from 145.5 last month. The Expectations Index, representing short-term outlook for income, business and labor market conditions also fell, from 89 to 87.6.
“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. Meanwhile, the proportion of consumers planning to purchase homes, automobiles and major appliances over the next six months decreased.” said Lynn Franco, Senior Director of Economic Indicators at the Conference Board.
She added that the group expects retailers to do well during the holiday season and that consumer confidence is expected to increase along with the economic expansion, but that both confidence and spending will likely face headwinds from rising prices and potential resurgences of COVID-19 in the coming months.
The new Omicron variant that has emerged in the past week will undoubtedly take its toll on consumer confidence in the coming months as this month’s survey did not have time to fully capture consumer sentiments as it emerged.
Market reactions to the new variant though are enough of a preliminary proxy. Global markets fell upon learning of the new virus variant, and this morning global markets took another tumble amidst a statement from the Moderna CEO that existing vaccines will be less effective against the Omicron variant.
Consumers’ view of the present situation was mixed in November. Their appraisal of current business conditions was less favorable in November. Seventeen percent of consumers said business conditions are “good,” compared to 18.3% in October. Consumers’ assessment of the labor market was moderately more favorable, with 58% of consumers saying jobs were “plentiful” — up from 54.8%.
The short-term outlook was a little bleaker, with consumers being less optimistic about the short-term labor market outlook specifically. Twenty-two-point-one percent of consumers expect more jobs to be available in the months ahead, down from 24.4% with 18.9% anticipating fewer jobs, up slightly from 18.7%.
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