Consumer confidence in the U.S economy plummeted in November as more Americans continued to measure their expectations that rising inflation would ease any time soon.
In the latest results of the business nonprofit Conference Board’s Consumer Confidence survey that were released on Tuesday, it found that Americans were tempering their assessments of when the situation will improve.
According to the nonprofit’s Present Situation Index, which measures the immediate sentiments of business and labor conditions, the rating fell to 142.5 from 145.5. The Expectation Index, aimed at measuring short term outlook for income, business and labor market conditions, fell as well from 89.0 to 87.6.
Lynn Franco, Senior Director of Economic Indicators at The Conference Board, said that declines seen in November can be attributed primarily to rising prices and to a lesser extent concern about the COVID-19 Delta variant that swept across the country this summer.
Though she noted that holiday spending could portend to an economic expansion in 2022, Franco cautioned that a resurgence of COVID-19 or higher inflation can create headwinds for confidence and spending.
“Consumer confidence moderated in November, following a gain in October,” said Franco in a press release accompanying the new survey data.
“Concerns about rising prices…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.”
Throughout 2021, inflation’s resurgence after years of dormancy has become a prime concern. Trillions of dollars in fiscal stimulus, a resurgence of consumer demand after a year of COVID restrictions eased, and supply chain bottlenecks have pushed prices only higher this year.
The survey shows that consumers’ appraisal of business conditions in November were not considered particularly favorably by respondents. Only 17% rated them as good, up from 18.3% in October, whereas those who said they were “bad” rose to 29% from 25.7% last month.
In terms of the labor market, respondents were a little more positive. Of those who said jobs were “plentiful” in the present, 58% said this was the case, up from 54.8% in October.
Following the curtailing of generous federal unemployment benefits on Labor Day, the labor market went through several weeks of adjustment, leaving weaker than expected job reports in the subsequent months. However, last week’s number of initial unemployment claims fell to the lowest levels seen since 1969 in a sign that job growth has been meaningful.
For all the pessimism about the current economic situation, consumers in the Conference Board survey were more mixed in their assessment of the economy’s state in the next six months.
There was a slight rise to 24.1% of consumers who expect business conditions to improve in 2022 while the percentage of those who expect it to be worse dropped slightly to 20.7%. On the labor side, 22.1% expect more jobs to be available and only 18.9% anticipate that there will be less.
However, their perceptions of their personal financial prospects in the next six months is more dour. Only 17.9% of consumers expect their incomes to increase, lower than the 18.4% in October, and 12% expect their incomes to decrease, slightly higher than the 11.2% one month earlier.
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