U.S. consumer confidence rose in November after three straight monthly declines, with U.S. consumers planning big-ticket purchases, including motor vehicles and houses, over the next six months despite higher prices and interest rates.
The Conference Board, a global, nonprofit think tank and business membership organization, said its consumer confidence index increased to 102.0 this month from a downwardly revised 99.1 in October. Economists polled by Reuters had forecast the index dipping to 101.0.
Based on consumers’ assessment of current business and labor market conditions, The Conference Board’s survey present situation index edged down to 138.2 from 138.6 in October. Based on consumers’ short-term outlook for income, business and labor market conditions, its expectations index rose to 77.8 from 72.7.
Despite this month’s improvement, The Conference Board said that its Expectations Index remained below 80 for the third consecutive month, which historically signals a recession within a year.
The organization also said that while consumers’ concern about an impending recession abated slightly—to the lowest levels this year—around two-thirds surveyed in November still believe a recession to be “somewhat” or “very likely” to happen over the next 12 months, which is consistent with the short and shallow recession the organization anticipated in the first half of 2024.
“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.”
Peterson added: “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. 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.”
“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. Meanwhile, average 12-month inflation expectations receded back to 5.7 percent after a one-month uptick to 5.9 percent. 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.”
