Consumer confidence dipped in November, two recently released monthly surveys found, as concerns about inflation dimmed consumers' view of their financial prospects and helped prompt a pullback on consumer spending plans.
The latest numbers from The Conference Board, a New York-based not-for-profit think tank, show that consumer confidence retreated last month after a one-month uptick in October; the organization's Consumer Confidence Index had posted three straight months of declines (in July, August and September) before that as new COVID-19 cases caused by the delta variant surged.
In November, the Consumer Confidence Index stood at 109.5 (with a baseline of 100 established in 1985), down from a revised 111.6 in October and a 2021 high of 128.9 in June.
Consumers' assessments of both current business conditions and the short-term financial outlook for their household lost ground last month: 29% of consumers surveyed in November rated current business conditions as "bad," up from 25.8% who said the same in October. Further, 12% said they expect their income to decrease in the next six months, up from 11.2% expressing the same expectation in October.
Meanwhile, the University of Michigan's monthly Index of Consumer Sentiment, released last week, fell 6% in November from October, and consumer expectations declined 6.5% from the previous month. "Consumers expressed less optimism in the November 2021 survey than any other time in the past decade about prospects for their own finances as well as for the overall economy," Survey of Consumers Chief Economist Richard Curtin wrote. They're still planning to fund much-anticipated holiday celebrations, Curtin noted, but beyond that, the outlook is iffy.
"Consumers have a strong desire to resume more-normal holiday gatherings with family and friends and to use their accumulated savings to fund their celebrations and gifts despite higher prices," he wrote. However, one in four consumers in November said inflation had cut into their living standards, and they're expecting their incomes to take a hit when adjusted for inflation. They further predict that "spending cutbacks due to rising inflation [will] slow the pace of growth in the national economy in the year ahead," Curtin wrote.
The Conference Board, in its survey report, noted that fewer consumers in November than October said they were planning major purchases—of homes, automobiles or large appliances—in the next six months.
On the brighter side of consumers' feelings about the economy, 24.1% of those surveyed by the Conference Board in November said they expect overall business conditions to improve in the short term, up from 22.7% who said the same in October. In addition, the share of consumers who expect business conditions to worsen fell, sliding to 20.7% from 21.9%.
"The Conference Board expects this to be a good holiday season for retailers, and confidence levels suggest the economic expansion will continue into early 2022," Conference Board Senior Director of Economic Indicators Lynn Franco said in a statement. "However, both confidence and spending will likely face headwinds from rising prices and a potential resurgence of COVID-19 in the coming months."
Both surveys were completed before the emergence of the omicron variant was first reported; the Conference Board is slated to release its December Consumer Confidence Index on Dec. 22.