Consumer Expectations Remained at Recessionary Levels in November

(Robert Hughes, American Institute for Economic Research) The Consumer Confidence Index from The Conference Board fell for the second consecutive month in November. The composite index decreased by 2.0 points, or 2.0 percent, to 100.2.

The index is down 10.5 percent from November 2021 and 22.3 percent from the recent peak of 128.9 in June 2021. Both major components of the consumer confidence index declined in November.

The expectations component dropped 2.5 points, or 3.2 percent, to 75.4, while the present-situation component – one of AIER’s Roughly Coincident Indicators – sank 1.3 points, or 0.9 percent, to 137.4. The present situation index is off 4.8 percent over the past year while the expectations index is down 16.4 percent from a year ago. The present situation index remains at a historically favorable level while the expectations index remains consistent with prior recessions.

Within the expectations index, two of the three components weakened versus October. The index for expectations for higher income fell 2.4 points to 17.2, and the index for expectations for lower income rose 1.4 points to 16.6, leaving the net (expected higher income – expected lower income) down 3.8 points at 0.6.

The outlook for the jobs market deteriorated in November as the expectations for more jobs index decreased by 0.9 points to 18.6, and the expectations for fewer jobs index rose by 0.6 points to 21.4, putting the net down 1.5 points to -2.8.

On the positive side, the index for expectations for better business conditions rose 0.3 points to 19.9 and the index for expected worse conditions fell 1.6 points, leaving the net (expected business conditions better – expected business conditions worse) up 1.9 points but still at a -2.8 reading.

Current business conditions and current employment conditions had mixed results within the present situation index. The net reading for current business conditions (current business conditions good – current business conditions bad) was -8.5 in November, down from -6.3 in October.

Current views for the labor market saw the jobs hard to get index hold at 13.0 while the jobs plentiful index rose 1.0 points to a solid 45.8 reading. The net index (jobs hard to get – jobs plentiful) added one point to 32.8 in November.

According to the report, “The Present Situation Index moderated further and continues to suggest the economy has lost momentum as the year winds down.”

Furthermore, “Consumers’ expectations regarding the short-term outlook remained gloomy. Indeed, the Expectations Index is below a reading of 80, which suggests the likelihood of a recession remains elevated.”