Consumer confidence in the United States saw a significant decline in November, as households expressed concerns over job security and overall financial stability. The Conference Board reported that its consumer confidence index plummeted to 88.7 this month, a sharp drop from an upwardly revised 95.5 in October. This marks the lowest level of consumer confidence since April, as increasing anxieties surrounding economic conditions took center stage.
Analysts had anticipated a more moderate decrease, with a Reuters poll predicting the index to settle at 93.4, down from the previously reported figure of 94.6 for October. Dana Peterson, the chief economist at the Conference Board, noted that responses from consumers highlighted key issues such as inflation, tariffs and trade, and the political climate, with particular emphasis on the recent government shutdown.
While concerns about the labor market remained prevalent, there was a slight easing in mentions related to employment. However, overall sentiment in November was notably more negative than in the previous month. Consumer confidence appeared subdued across all income levels, with individuals earning less than $15,000 annually showing slight improvement, yet still recording the lowest levels of confidence.
This report coincides with a lagging job market, as evidenced by the latest jobs report from September, which indicated an addition of 119,000 jobs while the unemployment rate rose by 0.1 percentage points to 4.4%. The uncertainty surrounding the federal government shutdown, which became the longest in U.S. history, has contributed to a lack of sufficient economic data, making it difficult to accurately assess the current economic climate.
Economists have noted a growing trend of consumers putting off significant purchases amid worries about future financial conditions. Jennifer Lee, a senior economist at BMO, suggested that the fear of what lies ahead is causing individuals to hesitate on major expenditures.
The backdrop of declining consumer sentiment aligns with dovish remarks from Federal Reserve officials, who indicated that a potential rate cut might be on the horizon. On Monday, Federal Reserve Governor Christopher Waller remarked that the current weakness in the job market might warrant a quarter-point rate cut as early as December, although he noted that any further action would be contingent upon a substantial influx of economic data that has been delayed due to the shutdown.
