US consumer confidence fell for 2nd month in Nov
CONSUMER confidence in the United States fell for the second straight month in November amid ongoing high inflation, rising interest rates and layoffs in the technology sector.
The Conference Board reported on Tuesday that its consumer confidence index fell to 100.2 from 102.2 in October. November’s figure is the lowest since July, and likely reflected an uptick in gas prices earlier this fall, said Lynn Franco, the board’s senior director of economic indicators.
Gas prices have since reversed and fell to $3.52 a gallon on average nationwide on Tuesday, according to the American Automobile Association. That’s down from $3.76 a month ago.
The data indicate Americans are taking a more gloomy view about the economy. Before the coronavirus pandemic, the index regularly topped 120. With the cost of food, rent, clothing and other essentials surging, inflation is near the worst in four decades, rising 7.7 percent in October from a year earlier.
Despite the negative outlook, however, most Americans — particularly those with higher incomes — are still spending, fueling a generally healthy start to the winter holiday shopping season last weekend.
The business research group’s present situation index — which measures consumers’ assessment of current business and labor market conditions — dropped slightly to 137.4 from 138.7 in the 10th month.
And the board’s expectations index — a measure of consumers’ six-month outlook for income, business and labor conditions — declined to 75.4 from 77.9 last month.
Still, Americans opened their wallets on Black Friday and over the post-Thanksgiving weekend. Spending on Black Friday jumped 12 percent from a year earlier, according to MasterCard Spending Pulse, though that figure is not adjusted for inflation.
And on so-called Cyber Monday earlier this week, Americans boosted their online spending by 5.8 percent from a year earlier, Adobe Analytics said.
Consumers may not be able to sustain solid spending growth for much longer. A rising number of households are stepping up their use of credit cards — or “buy now, pay later” plans — to keep up with higher prices. And many are also dipping into savings, which rose sharply — on average — during the pandemic, as government stimulus checks and the postponement of spending on travel and entertainment boosted the average American’s bank account.
Yet for lower-income households, those savings have largely been spent, though they may continue to fuel activity for higher-earning families.
Rising consumer spending, even after adjusting for inflation, is expected to buoy the economy in the final three months of 2022. Next year, however, many economists expect escalating interest rates, still-high prices and a cooling job market to weigh on the economy, possibly even tipping it into recession.