Consumer Confidence Improves in November; Inflation Expectations Fall
by:Tom Moeller
|in:Economy in Brief
Summary
- Confidence improves to highest level since July 2023.
- Both present situation & expectations measures increase.
- Inflation & interest rate expectations decline.
The Conference Board's Index of Consumer Confidence rose 1.9% (10.6% y/y) to 111.7 during November following a 10.5% October rise, revised from 9.6%. The level of confidence has moved up from a low of 97.5 in April to the highest level since July of last year. The Action Economics Forecast Survey expected a reading of 112.0 in November. Consumer confidence has been fluctuating between 97.5 and 114.0 over the past two years.
Both components of the index rose this month. The present situation index increased 3.5% (3.2% y/y) to 140.9 after surging 9.9% in October to 136.1. The expectations index improved 0.4% (19.3% y/y) in November to 92.3 after rising 11.0% in October.
The percentage of respondents assessing business conditions as “good” eased to 21.3% this month after rising to 22.0% in October. It remained near the highest percentage in fifteen months. The percentage assessing conditions as “bad” eased to 15.3% from 16.7% in October.
The appraisal of labor market conditions slipped in November as 33.4% of respondents thought jobs were plentiful, down from 34.1% in October. Jobs were viewed as hard to get by 15.2% of respondents this month following 17.6% in October. This measure has risen steadily this year from 11.0% in January. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) rose m/m to 18.2%, but remained below a high of 47.1% in March 2022. This series has a 60% correlation with the unemployment rate over the last ten years.
Expectations for business conditions surged in November. A higher 23.5% of respondents expect conditions to improve over the next six months, up from 21.1% in October, while a higher 15.2% expect them to worsen, up from 13.0% in October. On employment, 21.7% expect the number of jobs to increase over the next six months, the highest percentage in roughly two years and notably higher than last month’s 18.4%. A somewhat larger 17.8% respondents expect the number of jobs to decline versus 16.2% in October. A lessened 19.0% expect income to increase in six months versus 19.5% in October. That remained up from 16.3% in February and compares to 11.8% who expect income to decrease.
The expected rate of price inflation over the next twelve months fell to 4.9% in November from 5.2% in October. This was the lowest since March 2020. Interest rates are expected to rise over the year but the percentage expecting an increase fell to 43.6% from 47.2% in October. The percentage of respondents expecting equity prices to increase over the next twelve months increased to 56.4% from 51.9% in October, while the percentage expecting a decline eased to 21.3% from 22.3%.
The percentage of respondents planning to buy a home in November fell to 5.4%, its lowest in three months, from 6.1% in October. Plans to purchase an automobile edged down this month to 12.6% from 13.1% in October.
The Consumer Confidence data are available in Haver’s CBDB database. The total indexes, which are indexed to 1985=100, appear in USECON, and market expectations are in AS1REPNA.
The minutes to the latest FOMC meeting can be found here.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
