Consumer Confidence Plummets In November As Americans Despair Over Rising Prices

Consumer confidence in the U.S. plummeted in November as more Americans question whether rising inflation will ease.

The Conference Board’s consumer confidence survey released on Tuesday found that Americans are unsure regarding when the situation will improve.

According to the nonprofit's Present Situation Index, which measures the immediate sentiments of business and labor conditions, the rating fell to 142.5 from 145.5. The Expectation Index, which measures the short-term outlook for income, business and labor market conditions, fell from 89 to 87.6.

Lynn Franco, senior director of economic indicators at The Conference Board, said that declines seen in November can be attributed primarily to rising prices and, to a lesser extent, concern about the COVID-19 Delta variant that swept across the country this summer.

Though she noted that holiday spending could portend to an economic expansion in 2022, Franco cautioned that a resurgence of COVID-19 or higher inflation can create headwinds for confidence and spending.

“Consumer confidence moderated in November, following a gain in October,” said Franco in a press release accompanying the new survey data.

"Concerns about rising prices ... were the primary drivers of the slight decline in confidence. Meanwhile, the proportion of consumers planning to purchase homes, automobiles and major appliances over the next six months decreased.”

Throughout 2021, inflation’s resurgence after years of dormancy has become a prime concern. Trillions of dollars in fiscal stimulus, a resurgence of consumer demand after a year of COVID restrictions and supply chain bottlenecks have pushed prices higher.

President Joe Biden and the Federal Reserve have made combating it a priority, and consumers have frequently expressed through other surveys their frustration with rising prices for basic goods.

The survey shows that consumers' appraisal of business conditions in November was not favorable. Only 17% of respondents rated them as good, from 18.3% in October, whereas those who said they were "bad" rose to 29% from 25.7% last month.

In terms of the labor market, respondents were a little more positive. Of those who said jobs were "plentiful." 58% said this was the case, up from 54.8% in October.

Following the curtailing of generous federal unemployment benefits on Labor Day, the labor market went through several weeks of adjustment, producing weaker-than-expected job reports in the subsequent months. However, last week’s number of initial unemployment claims fell to the lowest level since 1969 in a sign that job growth has been significant.

There was a slight rise to 24.1% of consumers who expect business conditions to improve in 2022 while the percentage of those who expect them to be worse dropped slightly to 20.7%. On the labor side, 22.1% expect more jobs to be available and 18.9% anticipate that there will be less.

However, perceptions of their personal financial prospects in the next six months are more dour. Only 17.9% of consumers expect their incomes to increase, lower than the 18.4% in October, and 12% expect their incomes to decrease, slightly higher than the 11.2% one month earlier.