US Consumer Confidence Tumbles to Seven-Month Low
Sharp drop in November index raises concerns over holiday spending and economic resilience as recession fears linger.
A key measure of US consumer confidence fell sharply in November to its lowest level in seven months, signaling mounting pessimism over the economic outlook and raising concerns for the crucial holiday retail season.
The Conference Board announced Tuesday that its Consumer Confidence Index plunged to 88.7, a steep 6.8-point drop from October's revised 95.5 reading. The decline defied economist expectations and reflected growing consumer anxiety about the labor market, personal finances, and persistent inflation.
"Consumer confidence tumbled in November to its lowest level since April after moving sideways for several months," said Dana M. Peterson, Chief Economist at The Conference Board. Peterson noted that consumers were "notably more pessimistic about business conditions six months from now."
Driving the headline weakness was a significant deterioration in the Expectations Index, which reflects the short-term outlook for income, business, and labor conditions. The index fell to 63.2 from 71.3 in October. This marks the tenth consecutive month it has remained below the 80-point threshold, a level that historically signals a potential recession within the next year.
The Present Situation Index, which gauges consumers' assessment of current conditions, also declined, falling to 125.9 from 131.5.
The report lands in a climate of significant economic uncertainty. While the Federal Reserve initiated an interest rate cut in late October to support a cooling economy, consumers remain worried. The survey revealed that 12-month inflation expectations remained elevated, with the median rate increasing to 4.8%. This persistent concern over rising prices appears to be weighing on household sentiment despite some easing in headline inflation figures earlier in the year.
Adding to the uncertainty, the release of official October inflation and labor market data was delayed by a recent federal government shutdown, leaving policymakers and investors with an incomplete picture of the economy's trajectory. However, recent reports from the Federal Reserve's Beige Book indicated that economic activity was little changed while employment saw a slight decline.
The erosion in confidence could have tangible consequences for the economy, particularly for retailers who depend on robust consumer spending during the holiday season. The Conference Board's data showed that purchasing intentions for big-ticket items like cars and major appliances weakened in November.
The dour report will be closely watched by the Federal Reserve ahead of its December policy meeting. While the central bank has already pivoted toward easing, the sharp decline in consumer sentiment could amplify calls for further action to shore up the economy against a potential downturn.