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Economy in Brief

U.S. Consumer Confidence Falls Sharply in November, Disappointing Expectations
by Tom Moeller  November 24, 2020

• Confidence declines significantly, both m/m and y/y.

• View of present conditions eases, but expectations collapse.

• Older individuals grow more pessimistic.

The Conference Board's consumer confidence survey indicated widespread deterioration during November. The index fell 5.2% (-24.2% y/y) to 96.1 from 101.4 in October, revised from 100.9 (1985=100). A decline to 99.0 had been expected in the Action Economics Forecast Survey. Over the last 25 years, there has been a 51% correlation between the level of confidence and the y/y change in real consumer spending.

The index of expected conditions in six months fell 8.9% (-10.8% y/y), the fourth decline in five months. Expectations have fallen 15.6% since June. A greatly lessened 27.4% respondents expected improvement in business conditions in the next six months while a slightly increased 19.8% expected a worsening. A fewer 25.9% expected a rise in employment, down from 41.2% in April, while a fairly steady 20.5% expected a decline. Income was expected to improve by a steady 17.6% of respondents, while a lessened 13.3% expected a decline.

The present situation index eased 0.3% in November, after having risen in October to the highest level since March. The decline reflected a lessened 17.6% of respondents who felt that business conditions were good and a lessened 33.5% who felt they were bad. The labor market was perceived as slightly better with the "labor market differential" (jobs plentiful minus jobs hard-to-get) remaining in positive territory. Jobs were viewed as hard to get by a steady 19.5% of respondents, down from 34.5% in April.

Expectations for the inflation rate in twelve months edged higher in November to 5.7%, but remained down from a 6.6% high in June. A greater 45.2% felt that interest rates would increase during the next twelve months while a greatly lessened 16.4% felt they would decline. Plans to buy a house, new or existing, increased in this month to 7.2% of respondents, up from a 4.7% low twelve months ago. A higher 11.6% of respondents planned to buy a car, up from 8.1% in April, and 43.9% planned to buy a major appliance within six months, down from 55.0% in February.

By age group, the index of confidence amongst those under 35 rose 2.2% (-10.8% y/y). Confidence of those aged 36-54 declined 10.7% (-27.8% y/y) to the lowest level in three months. And for those over age 55, confidence fell 5.3% (-27.6% y/y), to a three-month low.

The Consumer Confidence data are available in Haver's CBDB database. The total indexes appear in USECON, and expectations are in AS1REPNA.

Conference Board (SA, % Chg.) Nov Oct Sep Nov Y/Y 2019 2018 2017
Consumer Confidence Index -5.2 0.1 17.4 -24.2 -1.4 8.0 20.7
   Present Situation -0.3 7.4 15.3 -36.4 3.1 13.8 20.3
   Expectations -8.9 -4.6 18.8 -10.8 -6.0 2.6 21.1
Consumer Confidence by Age Group
   Under 35 Years 2.2 5.6 12.0 -10.8 0.3 2.7 6.4
   Aged 35-54 Years -10.7 4.8 15.1 -27.8 -1.1 7.0 16.4
   Over 55 Years -5.3 -5.8 21.8 -27.6 -1.9 11.8 33
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