November confidence index slips
But consumer outlook remains strong, economic researchers say
WASHINGTON — U.S. consumer confidence slipped this month but remains strong.
The Conference Board, a business research group, said Tuesday that its consumer confidence index fell to 135.7 in November from October’s 18-year high 137.9. Consumer expectations slipped to 111 from 115.1.
The index measures consumers’ assessment of current economic conditions and their outlook for the next six months. Their evaluation of today’s economy improved — but their assessment of future conditions slipped in November.
“Overall, consumers are still quite confident that economic growth will continue at a solid pace into early 2019,” says Lynn Franco, a Conference Board economist. “However, if expectations soften further in the coming months, the pace of growth is likely to begin moderating.”
Economists monitor consumer spirits because Americans’ spending accounts for about 70 percent of U.S. economic activity. From July through September, consumer spending rose at a 4 percent annual pace, fastest since late 2014.
Americans’ sunny mood reflects a strong job market. Unemployment has dropped to a five-decade low of 3.7 percent, and 46.6 percent of respondents told the Conference Board that jobs are “plentiful” — highest share since January 2001.
Economists are worried that U.S. economic growth could decelerate as the effect of last year’s tax-cut law fades and President Donald Trump’s taxes on imports take a toll.
“Despite a modest decline in confidence and the recognition that the pace of economic growth is slowing, consumers remain an upbeat lot,” Jim Baird, chief investment officer at Plante Moran Financial Advisors, said in a research note. “For now, they also appear to be comfortable opening their wallets and purses, letting their spending speak clearly on their behalf.”
The report follows several
indicators last week that pointed to slowing economic growth: orders for business equipment missed forecasts for a third month, another index of consumer sentiment fell to a three-month low, and unemployment claims rose.
“If expectations soften further in the coming months, the pace of growth is likely to begin moderating,” Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement.
Federal Reserve Vice Chairman Richard Clarida, speaking Tuesday in New York, sounded
optimistic on the economy and indicated the central bank is sticking to its plans for gradual interest-rate hikes as long as the economic data warrant more tightening.
The share of respondents saying business conditions will be better in six months fell to a five-month low of 22.5 percent while the share expecting higher incomes declined to a four-month low.
Information for this article was contributed by Paul Wiseman of The Associated press and by Katia Dmitrieva and Shobhana Chandra of Bloomberg News.