American consumers are growing increasingly anxious about the economic outlook, with a key confidence indicator falling to its lowest point since April, according to new data released on Tuesday.
Sharp Decline in Consumer Sentiment
The Conference Board's headline confidence index dropped significantly to 88.7 in November, down from 95.5 in October. This nonprofit research group, which has tracked consumer sentiment since the 1960s, reported the worrying slide as multiple economic pressures converge.
The index, benchmarked against 1985 when Americans felt perfectly average about the economy, now sits well below the 100-point threshold that indicates positive consumer sentiment. Current readings suggest shoppers believe economic conditions are deteriorating rapidly.
Multiple Factors Driving Economic Pessimism
Unlike previous declines driven by single events, this month's drop reflects a combination of concerning developments. The record-setting government shutdown, persistent inflation, and high-profile layoffs at major companies have collectively undermined consumer confidence.
Bret Kenwell, US investment analyst at eToro, told the Daily Mail: "It's not too surprising that confidence continues to wane. But we've seen an interesting twist over the past year, with November 2024's consumer confidence report hitting one of its highest levels of the past few years. Now it's at one of its lowest."
Dana Peterson, the Conference Board's chief economist, revealed that all five measures in their survey received 'weak' responses. Consumers expressed notable pessimism about business conditions over the next six months, while expectations for household incomes "shrunk dramatically" after six months of strongly positive readings.
Employment Concerns and Spending Implications
The proportion of consumers who described jobs as 'plentiful' fell to 27.6 percent in November, down from 28.6 percent the previous month and sharply lower than the 37 percent recorded in December last year.
This confidence dip comes at a critical time for retailers, coinciding with government data showing slowed retail sales in September after healthy summer performance. Economists now anticipate weaker growth in the final quarter of the year, partly due to the government shutdown's lingering effects.
Kenwell noted the concerning timing: "Investors find themselves at an interesting juncture, as delayed economic data from the government showed slower-than-expected retail sales from September, paired with eroding consumer confidence as we head into the all-important holiday season."
Despite the gloomy sentiment, some analysts remain cautiously optimistic about consumer spending. Thomas Simons, a chief economist at Jeffries, told the Associated Press: "We do not think that consumer spending is about to hit a cliff. Spending has decoupled from confidence, but risks to the downside are increasing."
The only bright spot in the survey came from stock market confidence, which remained high, while respondents over 55 expressed the most gloom about economic prospects.
