Consumer Confidence Drops for 4th Straight Month

The Conference Board, New York, said consumer confidence declined for the fourth consecutive month in November, albeit slightly.

The Consumer Confidence Index now stands at 125.5 (1985=100), down from 126.1 in October. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased from 173.5 to 166.9. The Expectations Index, based on consumers’ short-term outlook for income, business and labor market conditions, increased from 94.5 last month to 97.9 this month.

“Consumer confidence declined for a fourth consecutive month, driven by a softening in consumers’ assessment of current business and employment conditions,” said Lynn Franco, Senior Director of Economic Indicators with The Conference Board. “The decline in the Present Situation Index suggests that economic growth in the final quarter of 2019 will remain weak. However, consumers’ short-term expectations improved modestly, and growth in early 2020 is likely to remain at around 2 percent. Overall, confidence levels are still high and should support solid spending during this holiday season.”

Tim Quinlan, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said the consumer spending outlook remains positive. “While this marks the fourth consecutive monthly decline, the level is still high enough to suggest moderation in the pace of [personal consumption expenditures] growth rather than outright decline,” he said.

The report said consumers’ appraisal of current-day conditions was less favorable in November. The percentage of consumers claiming business conditions are “good” rose slightly from 39.7 percent to 40.2 percent, but those claiming business conditions are “bad” also increased, from 11.0 percent to 13.8 percent. Consumers’ assessment of the job market was less favorable than last month. Those saying jobs are “plentiful” decreased from 47.7 percent to 44.8 percent, while those claiming jobs are “hard to get” increased from 11.6 percent to 12.7 percent.

Consumers were moderately more optimistic about the short-term outlook. The percentage of consumers expecting business conditions will improve over the next six months decreased slightly from 18.7 percent to 17.2 percent, while those expecting business conditions will worsen increased slightly, from 11.5 percent to 12.1 percent.

Consumers’ outlook for the labor market was mixed. The proportion expecting more jobs in the months ahead decreased from 16.9 percent to 15.7 percent, but those anticipating fewer jobs also decreased, from 18.0 percent to 13.2 percent. Regarding their short-term income prospects, the percentage of consumers expecting an improvement edged up from 21.4 percent to 21.8 percent, while the proportion expecting a decrease declined from 6.9 percent to 6.2 percent.