The BareStory
U.S. consumer confidence declined in November to its lowest level in seven months, according to a survey released Tuesday by the Conference Board. The organization’s Consumer Confidence Index fell by 6.8 points to 88.7, below economists' expectations. The drop in sentiment occurred during a period marked by inflation and a recent government shutdown.
The decline was driven by increased pessimism about the economy and the job market. The Conference Board's chief economist, Dana Peterson, stated that consumers were notably more pessimistic about business conditions six months from now and that expectations for the labor market were "decidedly negative." According to the survey, the share of consumers describing jobs as "plentiful" fell from 28.6% in October to 6% in November. Write-in responses to the survey cited concerns over prices, inflation, trade, and politics.
Other economic indicators showed similar trends. Payroll firm ADP reported that private companies shed an average of 13,500 jobs over the past four weeks, while the University of Michigan’s consumer sentiment gauge also dropped in November. The government shutdown reportedly hampered the collection and release of economic data, causing many recent reports to be dated.
Following the weakening sentiment numbers, several Federal Reserve officials have indicated that further interest rate reductions may be warranted. Traders are now anticipating a high probability that the Fed will lower its key borrowing rate in December. In contrast to the broader pessimism, the Conference Board survey noted that respondents expressed "strongly positive" expectations for the stock market over the next year.
How it may affect me
As a U.S. reader:
• A potential Federal Reserve interest rate cut could soon make it cheaper for you to borrow money for major purchases like homes or cars.
• Finding a job may become more challenging, as the share of consumers describing jobs as "plentiful" has dropped sharply, with some data showing job losses.
• Widespread pessimism about the economy could lead people to reduce their spending, which may slow down overall economic activity.
• The actual state of the economy is uncertain, as a recent government shutdown hampered data collection, making some economic reports outdated.
