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Economy in Brief

U.S. Consumer Confidence Strengthens
by Tom Moeller  November 28, 2017

The Conference Board Consumer Confidence Index increased 2.6% during November (18.4% y/y) to 129.5 following an upwardly revised 4.6% October improvement. The index was at its highest level since November 2000. The Action Economics Forecast Survey expected a decline in the index this month to 124.0. During the past thirty years, there has been a 70% correlation between the level of consumer confidence and the y/y change in real PCE.

The increase in overall confidence reflected a 3.9% gain (20.0% y/y) in the expectations index to 113.3. The present situation index reading improved 1.2% (16.6% y/y) to 153.9.

The percentage of respondents indicating that business conditions are "good" rose to 34.9%, the highest level since December 2000. The percentage saying business conditions are "bad" fell to a recovery low of 12.7%. The 37.1% of respondents saying that jobs are "plentiful" was a 16-year high. The percentage claiming jobs are "hard to get" fell to a 16-year low of 16.9%. These readings of labor market conditions led a labor market differential (plentiful minus hard to get) of 20.2 percentage points, the highest since 2001. This differential is 97% inversely related to the unemployment rate.

The percentage expecting business conditions to improve over the next six months improved modestly to 22.4%, but remained well below the 26.9% March peak. The percentage expecting more jobs in six months rebounded to 22.6%, the most since March, following a sharp October decline. The percentage expecting incomes to strengthen at 20.1% remained below the March high of 22.5%.

The expected inflation rate in twelve months eased m/m to 4.5% and equaled the lowest level since February 2005. The percentage expecting higher interest rates over the next twelve months rose slightly m/m to 64.3%, but remained below the March high of 72.2%. An increased 6.9% expected to buy a home, up versus 6.0% during all of last year and 5.6% in 2015.

Confidence amongst individuals over aged 55 rose 43.1% y/y to a seventeen year high. Confidence amongst those aged 35-54 increased 8.4% y/y, but was below the October peak. Confidence amongst those under age 35 rose 0.9% y/y, also to the highest level since 2000.

The Consumer Confidence data is available in Haver's CBDB database. The total indexes appear in USECON, and the market expectations are in AS1REPNA

Conference Board (SA, 1985=100) Nov Oct Sep Y/Y % 2016 2015 2014
Consumer Confidence Index 129.5 126.2 120.6 18.4 99.8 98.0 86.9
  Present Situation 153.9 152.0 146.9 16.6 120.3 111.7 87.4
  Expectations 113.3 109.0 103.0 20.0 86.1 88.8 86.6
Consumer Confidence By Age Group
  Under 35 Years 139.8 127.2 127.5 0.9 122.4 116.0 106.6
  Aged 35-54 Years 125.7 135.0 125.8 8.4 106.2 103.9 92.4
  Over 55 Years 129.8 116.1 113.4 43.1 84.6 84.1 73.8
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