The US government has officially announced that the country's Consumer Confidence Index fell 2.1 points to 109.5 in November.
According to the Conference Board, consumers in the country are less confident about the economy's short-term outlook for their employment and income prospects. Consumer spending generally leads around two-thirds of the country's economic growth. In the last month, the data increased marginally. So, analysts were expecting a push in Consumer Confidence, but failed.
Expectations Index and Present Situations Index
On the other hand, the Expectations Index fell to 87.6 from 89 in the earlier month. The Expectations Index measures how consumers feel about the short-term outlook for income, business and employment conditions. Additionally, the Present Situations Index dropped to 142.5 in November from 145.5 in October. The Present Situations Index assesses how consumers feel about the current business and job market situation. So, the common citizens are not pleased with the economy's monetary policy and employment growth, even after the pandemic started to ease.
Multiple reasons are being identified behind this fall, like surging prices in 2021, and businesses are experiencing rising costs from labor and raw material shortages. So, inflation is the most important reason. Hence, the businesses are passing a part of these surges in costs to the consumers. The country's consumers prices are hitting the highest in more than the last 3 decades, and the consumers reacted negatively about the Consumer Confidence. The Conference Board additionally mentioned that the proportion of consumers who are planning to buy homes, automobiles, and major appliances in the upcoming 6 months, have decreased.
The official statement behind the fall
Commenting on that, Lynn Franco, Senior Director of Economic Indicators at the Conference Board stated, "Concerns about rising prices - and, to a lesser degree, the Delta variant - were the primary drivers of the slight decline in confidence." Franco added, "Confidence levels suggest the economic expansion will continue into early 2022. However, both confidence and spending will likely face headwinds from rising prices and a potential resurgence of Covid-19 in the coming months."
Omicron variant is negligible on growth
The Conference Board had finished its survey before the news of the Omicron variant of the Covid virus started to roll on headlines, and again affected consumers. However, some economists are thinking that the Omicron variant will have only a moderate negative impact on the growth. Economists at Oxford Economics are expecting real GDP growth of 7.9% in Q4 and real consumer spending growth of 6.5%.