COVID Fatigue Takes Toll on Consumer Confidence
The Conference Board, New York, said its Consumer Confidence Index fell again in November amid a sharp spike in coronavirus cases nationwide.
The Index now stands at 96.1, down from 101.4 (an upward revision) in October. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – decreased slightly from 106.2 to 105.9. The Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – declined from 98.2 in October to 89.5 this month.
“Heading into 2021, consumers do not foresee the economy, nor the labor market, gaining strength,” said Lynn Franco, Senior Director of Economic Indicators with The Conference Board. “In addition, the resurgence of COVID-19 is further increasing uncertainty and exacerbating concerns about the outlook.”
“With virus case counts on the rise, consumer confidence waned in November with particular vulnerability in how people feel about the future,” said Tim Quinlan, Senior Economist with Wells Fargo Securities, Charlotte, N.C. “A steady drumbeat of positive vaccine news may help in coming months.”
The report said consumers’ appraisal of current conditions was relatively unchanged in November. The percentage of consumers claiming business conditions are “good” declined from 18.6 percent to 17.6 percent, but those claiming business conditions are “bad” also decreased, from 34.4 percent to 33.5 percent. Consumers’ assessment of the labor market was unchanged. The percentage of consumers saying jobs are “plentiful” held steady at 26.7 percent, while those claiming jobs are “hard to get” was virtually unchanged at 19.5 percent.
Consumers, however, have grown less optimistic about the short-term outlook. The percentage of consumers expecting business conditions will improve over the next six months decreased from 36.0 percent to 27.4 percent, while those expecting business conditions will worsen increased from 15.9 percent to 19.8 percent. Consumers’ optimism regarding the job market also weakened. The proportion expecting more jobs in the months ahead declined from 32.0 percent to 25.9 percent, while those anticipating fewer jobs increased moderately from 19.8 percent to 20.5 percent. Regarding their short-term income prospects, the percentage of consumers expecting an increase was virtually unchanged at 17.6 percent, while the proportion expecting a decrease declined from 14.2 percent to 13.3 percent.
Quinlan noted despite the decline in overall confidence, there appeared to be broad-based improvement in plans for major purchases. “Plans to buy an automobile improved for both new and used cars, as did plans to buy major appliances,” he said. “Interest in home-buying is on the rise as well. Interest in buying an existing home shot up to its highest level since March 2019, which is consistent with the strength we’ve seen in home sales.”
