Consumer confidence moves ahead
The Conference Board reported today that the Consumer Confidence Index increased in November to 102.0 from a downwardly revised 99.1 in October.
The Present Situation Index, which is based on consumers’ assessment of current business and labor market conditions, decreased slightly to 138.2 from 138.6, however.
The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, moved ahead to 77.8 in November from a downwardly revised reading of 72.7 in October.
Despite signs of improvement, the Expectations Index remains below 80 for a third consecutive month. This level historically signals a recession within the next year.
Around two-thirds of consumers surveyed in November still perceive a recession to be “somewhat” or “very likely” to occur over the next 12 months. This is consistent with the short and shallow recession we anticipate 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.”
Peterson noted that November’s increase in consumer confidence was concentrated primarily among householders ages 55 and up. In contrast, confidence among householders aged 35-54 declined slightly.
“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,” Peterson said. “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.”
Regarding the Present Situation, consumers’ assessment of current business conditions was, on balance, slightly more positive in November with 19.8% of consumers saying business conditions were “good,” up from 18.3% in October. But 19.5% said business conditions were “bad,” up from 18.8%.
Consumers’ appraisal of the labor market was mixed in November as 39.3% said jobs were “plentiful,” up slightly from 37.9% in October. However, 15.4% of consumers said jobs were “hard to get,” up from 14.1%.
