Consumer confidence in the economy improved in November but still points to a recession hitting the U.S. economy sometime in the next 12 months, the Conference Board said Tuesday.
The Conference Board said its Consumer Confidence Index increased in November to 102.0, beating expectations for a reading of 101.5. The prior month was revised down to 99.1 from the original reading of 102.6, indicating that people were less happy with the economy in October than previously estimated.
This was the first monthly increase in the index following three straight months of decline.
The gauge of consumer views of the current business and labor market conditions ticked down slightly. The measure of expectations for future income, business, and labor market conditions improved from the downwardly revised October figure.
Despite the improvement in the expectations measure, at 77.8 the expectations index remains below the 80 threshold that the Conference Board says historically signals a recession within the next year.
“While consumer fears of an impending recession abated slightly—to the lowest levels seen this year—around two-thirds of consumers surveyed in November still perceive a recession to be ‘somewhat’ or ‘very likely”‘ to occur over the next 12 months. This is consistent with the short and shallow recession we anticipate in the first half of 2024,” the Conference Board said.
The decline in the present situation index was driven by less optimistic views of job availability. While more consumers said jobs were plentiful than a month ago (39.3 percent compared with 37.9 percent in October), the share saying jobs are hard to get also increased (15.4 percent compared with 14.1 percent last month).
Similarly, the share of consumers saying business conditions were good rose and so did the share saying business conditions are bad. The share saying conditions are good rose to 19.8 percent from 18.3 percent. The share saying they are bad rose to 19.5 percent from 18.8 percent.
Expectations for interest rate increases ticked down but the outlook for stock prices continued to weaken. The average 12-month inflation expectations fell to 5.7 percent after ticking up to 5.9 percent last month. Following a two month decline in expectations for their family’s financial situation, consumers registered an improvement in expectations in November.
Buying plans for big-ticket items—cars, homes, and major appliances—trended downward on a six-month basis.
There was a generational gap in November, with older consumers taking a sunnier view than young consumers.
“November’s increase in consumer confidence was concentrated primarily among householders aged 55 and up; by contrast, confidence among householders aged 35-54 declined slightly. General improvements were seen across the spectrum of income groups surveyed in November. Nonetheless, write-in responses revealed consumers remain preoccupied with rising prices in general, followed by war/conflicts and higher interest rates,” said Dana Peterson, Chief Economist at The Conference Board.