Consumer Confidence Remains at 17-Year High

The Conference Board, New York, said its Consumer Confidence Index rose for the fifth consecutive month heading into the holiday shopping season.

The Index rose to 129.5 in November, up from 126.2 in October, its highest level since November 2000. The Present Situation Index increased from 152.0 to 153.9, while the Expectations Index rose from 109.0 last month to 113.3.

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said consumers are “upbeat” going into the holiday season.

“What is even better today is that consumer confidence back in November 2000 was actually coming down, while today’s consumer confidence is still climbing,” Vitner said. “Not only is consumer confidence the highest in 17 years, it is also still improving compared to what was happening in November 2000.”

Consumers are entering the holiday season in very high spirits and foresee the economy expanding at a healthy pace into the early months of 2018,” said Lynn Franco, Director of Economic Indicators with The Conference Board.

The report said consumers’ assessment of current conditions improved moderately in November. The percentage saying business conditions are “good” increased from 34.4 percent to 34.9 percent, while those saying business conditions are “bad” declined from 13.5 percent to 12.7 percent. Consumers’ assessment of the labor market also improved. Those stating jobs are “plentiful” increased from 36.7 percent to 37.1 percent, while those claiming jobs are “hard to get” decreased slightly from 17.1 percent to 16.9 percent.

Consumers’ optimism about the short-term outlook was also more favorable in November. The percentage of consumers expecting business conditions to improve over the next six months increased slightly from 22.1 percent to 22.4 percent, while those expecting business conditions to worsen decreased from 7.0 percent to 6.5 percent.

Consumers’ outlook for the job market was also more upbeat than in October. The proportion expecting more jobs in the months ahead increased from 18.7 percent to 22.6 percent, while those anticipating fewer jobs declined from 11.6 percent to 11.0 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement decreased marginally from 20.3 percent to 20.1 percent, while the proportion expecting a decrease was virtually unchanged at 7.6 percent.

Vitner said perhaps the biggest issue is not how confident consumers are, but if they are willing to borrow in order to increase holiday purchases this year.

“Although consumer confidence has improved for several household income segments, it is still not homogeneous,” Vitner said. “It is clear that those in the upper levels of income have been the most upbeat since late last year, while those in the lower income levels have had their issues with confidence.”