Consumer confidence declined in November after also losing ground in October. According to the Conference Board’s November Consumer Confidence Index report, this decline results from inflation, with high food and gasoline prices being the main culprits.
The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—decreased to 137.4 from 138.7 last month, and the Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—declined to 75.4 from 77.9.
“Consumer confidence declined again in November, most likely prompted by the recent rise in gas prices,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index moderated further and continues to suggest the economy has lost momentum as the year winds down. Consumers’ expectations regarding the short-term outlook remained gloomy. Indeed, the Expectations Index is below a reading of 80, which suggests the likelihood of a recession remains elevated.”
“Inflation expectations increased to their highest level since July, with both gas and food prices as the main culprits. Intentions to purchase homes, automobiles, and big-ticket appliances all cooled. The combination of inflation and interest rate hikes will continue to challenge confidence and economic growth into early 2023.”
The Confidence Index report indicates that consumers’ assessment of current business conditions was mixed in November. 18.2% of consumers said business conditions were “good,” up from 17.7%. On the other hand, more consumers, 26.7%, said business conditions were “bad,” up from 24.0%.
Likewise, consumers remain pessimistic about the short-term business conditions outlook in November. 19.9% of consumers expect business conditions to improve, up slightly from 19.6%, and 22.7% expect business conditions to worsen, down from 24.3%.
Despite the outlook provided by the Conference Board’s Consumer Confidence Index report and the slowing economy, consumers continue to spend.
Jack Kleinhenz, Chief Economist for the National Retail Federation, said, “willingness to spend has remained stable.” Retail sales for the first 10 months of the year were up 7.5% year-over-year, on track to meet NRF forecasts that both total 2022 retail sales and November-December holiday sales will grow between 6% and 8% over 2021.
In the NRF’s monthly economic review, Kleinhenz explained that “GDP is expected to grow very gradually in the final months of 2022, at best about half of what was recorded in the third quarter.” “Consumers are taking a certain step back and changing the way they allocate their resources.”