Dive Brief:
- Consumer confidence rose in November after a three-month decline amid brighter expectations about job availability, future incomes and business conditions, the Conference Board said Tuesday, reporting on its Consumer Confidence Index.
- Compared with October, consumers in a survey ended Nov. 15 saw interest rates rising less, a brighter outlook for inflation and prospects for improvement in their families’ financial condition in six months, the Conference Board said. At the same time, they voiced less optimism about stock prices and more modest plans for purchases of autos, homes and expensive appliances.
- When asked to describe their family financial condition, “the share [of survey respondents] reporting ‘good’ rose and those citing ‘bad’ fell, suggesting consumer finances remain healthy heading into the holiday season,” Conference Board Chief Economist Dana Peterson said in a statement.
Dive Insight:
After an unexpected surge during the third quarter, consumer spending — which fuels nearly 70% of economic growth — has shown some signs of cooling this quarter. Retail sales fell 0.1% last month in the first decline since March.
Gross domestic product growth will probably fall during the current quarter to a 2.1% annual rate from 4.9% during Q3, the Atlanta Fed forecast last week.
Falling demand is helping to slow inflation and ease pressure in the labor market, Federal Reserve Governor Christopher Waller said Tuesday, noting that the increase in the consumer price index eased last month to a 3.2% annual rate from 8% during much of 2022.
“All in all, it seems like output growth is moderating as I had hoped it would, supporting continued progress on inflation,” Waller said in a speech. “The labor market is also cooling off,” Waller said, noting that job creation has fallen this year and unemployment rose last month to 3.9% from a 50-year low of 3.4% in April.
At the same time, both Waller and Fed Governor Michelle Bowman — who also spoke on Tuesday — described the economic outlook as uncertain and said that the central bank needs to see sustained signs of disinflation before declaring victory in its most aggressive monetary tightening in four decades.
“My baseline economic outlook continues to expect that we will need to increase the federal funds rate further to keep policy sufficiently restrictive to bring inflation down to our 2% target in a timely way,” Bowman said in a speech. In the fight against inflation “recent progress has been uneven.”
Fed officials are poring over mixed data after having raised the benchmark interest rate since March 2022 from near zero to a range between 5.25% and 5.5%, the highest level in 22 years.
For example, the gain in the Conference Board’s consumer confidence index differs from a University of Michigan survey indicating that consumer sentiment sagged earlier in November to a six-month low.
At the same time, shoppers on Black Friday spent $9.8 billion online, or 7.5% more than last year. They will probably increase online spending to $221.8 billion during this holiday season, or 4.8% more than last year, according to a forecast by Adobe Analytics.
“I continue to see an unusually high level of uncertainty as I consider current economic conditions and my own views on the outlook for the economy and monetary policy,” Bowman said.
Fed policymakers are next scheduled to meet Dec. 12-13.
