The Conference Board reports that consumer confidence fell last month as the third wave of the pandemic hit the country.
The Conference Board Consumer Confidence Index® declined in November, after remaining relatively flat in October. The Index now stands at 96.1 (1985=100), down from 101.4 (an upward revision) in October. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – decreased slightly from 106.2 to 105.9. The Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – declined from 98.2 in October to 89.5 this month.
The rise in cases has caused state and local officials to issue stricter pandemic-related restrictions on social and business behavior. The survey finds voters have grown more pessimistic about the recovery.
The percentage of consumers expecting business conditions will improve over the next six months decreased from 36.0 percent to 27.4 percent, while those expecting business conditions will worsen increased from 15.9 percent to 19.8 percent. Consumers’ optimism regarding the job market also weakened. The proportion expecting more jobs in the months ahead declined from 32.0 percent to 25.9 percent, while those anticipating fewer jobs increased moderately from 19.8 percent to 20.5 percent. Regarding their short-term income prospects, the percentage of consumers expecting an increase was virtually unchanged at 17.6 percent, while the proportion expecting a decrease declined from 14.2 percent to 13.3 percent.
The survey cutoff was November 13.
The Associated Press report on the survey adds,
“We think the sharp rise in positive coronavirus cases nationwide, which has prompted new restrictions and shutdowns in many states, has led consumers to be more fearful of what lies ahead for them and their families as we head into the year-end holiday season,” said Chris Rupkey, chief financial economist at global financial group MUFG.
The pandemic caused confidence to plummet in the early spring.
In the leadup to the pandemic with the country enjoying unemployment at a half-century low of 3.9%, the confidence index had risen above 130. It stood at 132.6 in February but plunged to 85.7 in April as millions of Americans lost their jobs after the country went into lockdown to try to halt the spread of the pandemic.
The index has bounced around since its big April decline but remains well below the levels seen before the pandemic hit.
Successful production and distribution of effective vaccines should provide a boost in coming months, we hope.