November Consumer Confidence Takes Another Hit

The Conference Board reported its Consumer Confidence Index, which had decreased moderately in October, declined further in November.  

The Index fell to 90.4, down from 99.1 in October. The Present Situation Index decreased from 114.6 last month to 108.1 in November, while the Expectations Index declined to 78.6 from 88.7 in October.  

“The decline was mainly due to a less favorable view of the job market,” said Lynn Franco, director of economic indicators with The Conference Board. “Heading into 2016, consumers are cautious about the labor market and expect little change in business conditions.”   

The report said consumers’ assessment of current conditions was less positive in November. Those saying business conditions are “good” decreased from 26.8 percent to 24.4 percent. However, those claiming business conditions are “bad” also decreased from 18.3 percent to 16.9 percent. Consumers were less upbeat about the current state of the job market. Those stating jobs are “plentiful” decreased from 22.7 percent to 19.9 percent, while those claiming jobs are “hard to get” increased to 26.2 percent from 24.6 percent.  

Consumers’ optimism about the short-term outlook declined sharply in November. The percentage of consumers expecting business conditions to improve over the next six months decreased from 18.1 percent to 14.8 percent, while those expecting business conditions to worsen increased slightly to 11.0 percent from 10.4 percent.  

Consumers’ outlook for the labor market was also more pessimistic. Those anticipating more jobs in the months ahead fell from 14.4 percent to 11.6 percent, while those anticipating fewer jobs increased from 16.6 percent to 18.7 percent. The proportion of consumers expecting their incomes to increase declined from 18.1 percent to 17.2 percent, while the proportion expecting a decline increased from 10.5 percent to 11.8 percent.  

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said the drop in consumer confidence casts some doubt on recent improvement in employment conditions. Buying plans for cars and major appliances rose, however.  

“The deterioration in employment conditions is particularly disconcerting,” Vitner said. “Not only did consumers express more concern about current employment conditions, but they also expressed less optimism about future job growth.”  

Vitner said November’s drop in consumer confidence is a “caution flag” for the Fed. “Consumer confidence is fickle on a monthly basis and 90.4 still represents a level that is consistent with solid gains in consumer spending and overall growth,” he said. “The deterioration in the employment conditions, which account for 40 percent of the Consumer Confidence index, are concerning. The jobs are hard to get series has a fairly strong correlation with the unemployment rate and the most recent increase would suggest that the slide in the jobless rate may slow a bit or even possibly reverse a notch or two. That is totally inconsistent with the weekly unemployment claims data, however, including the data for the November survey week.”