The numbers: Consumer confidence fell in November to the lowest level in nine months because of worries about high inflation — and optimism could dip again if a new strain of the coronavirus said to be more resistant to vaccines keeps spreading.
The index of consumer confidence dropped to 109.5 from 111.6 in October, the privately run Conference Board said Tuesday. It was the fourth decline in the past five months.
Economists polled by The Wall Street Journal had forecast the index to fall to 110.
“Concerns about rising prices — and, to a lesser degree, the Delta variant — were the primary drivers of the slight decline in confidence,” said Lynn Franco, senior director of economic indicators at the board.
Big picture: Americans were already worried about the biggest surge in U.S. inflation in 30 years. Now the new omicron strain of the coronavirus is raising fresh angst.
So far neither rising prices nor the virus has kept people from spending, however. Stronger spending has given a lift to the economy as the year winds down.
By and large, the spending habits of Americans are determined more by how they view the labor market than anything else. Looked at that way, the economy is still in good shape. The survey’s measure of labor-market conditions hit an all-time high in November.
Key details: Some 58% of consumers said jobs are “plentiful,” an usually high number that reflects how many jobs are available. Companies have more than 10 million job openings and many are raising wages and benefits to attract workers.
Only 11.1% of those polled said jobs are hard to find.
Americans are somewhat less optimistic about the economy right now. The so-called present situation index slipped to 142.5 from 145.5. That’s the lowest level since April.
Another survey that looks ahead six months from now also declined slightly, but it was still higher than it was in September.
High inflation does appear to be altering spending habits. The percentage of people planning to homes, autos, and major appliances all declined.
What they are saying? “Supply chain disruptions, inflation, economic policy concerns, and a stubborn pandemic are all likely to continue to weigh on consumer confidence and sentiment in the months ahead,” said chief economist Joshua Shapiro of MFR Inc.
“Low confidence hasn’t had an effect on consumer spending, which continues to be strong and is limited mainly by Covid-19’s effect on the services industry,” said corporate economist Robert Frick of Navy Federal Credit Union.