Researchers at a New York-based organization that tracks buyer sentiment said U.S. consumer confidence fell for a fourth straight month in November, but remained high enough to support a steady pace of spending going into the holiday season.
The Conference Board, which calls itself a “member-driven think tank that delivers trusted insights for what’s ahead,” said its consumer confidence index slipped to a reading of 125.5 this month from an upwardly revised 126.1 in October. The figures, published Tuesday, show that consumer confidence has fallen for four straight months, although the organization said in a statement that “confidence levels still remain high, and should support solid holiday spending.”
The survey’s present situation measure, based on consumers’ assessment of current business and labor market conditions, fell to 166.9 this month from 173.5 in October. This “suggests that economic growth in the final quarter of 2019 will remain weak,” said Lynn Franco, senior director of economic indicators at The Conference Board. “However, consumers’ short-term expectations improved modestly, and growth in early 2020 is likely to remain at around 2%. Overall, confidence levels are still high and should support solid spending during this holiday season.”
The expectations index—drawn from consumers’ short-term outlook for income, business and labor market conditions—rose to 97.9 from 94.5 last month.
Michigan Consumer Sentiment Figures Rise
A separate estimate of consumer sentiment published by the University of Michigan last week found a slight improvement in buyer sentiment.
The Michigan study found that the Index of Consumer Sentiment was at 96.8 in November, a rise from October’s figure of 95.5. This represents a month-to-month increase of 1.4 percent.
The Index of Consumer Expectations, meanwhile, rose by 3.7 percent month-to-month, from 84.2 to 87.3. Current Economic Conditions, the remaining University of Michigan compiled index, fell by 1.4 percent from 113.2 to 111.6.
Richard Curtin, chief economist for Surveys of Consumers, noted that consumer confidence has been exceptionally high in recent years.
“In 30 of the past 35 months the Sentiment Index was 95.0 or higher, a level of optimism second only to when the Index was above 100.0 for 34 out of 36 months from January 1998 to December 2000, averaging 106.0,” Curtin said in a statement.
“The current period is distinctive for the much sharper partisan divisions in the economic expectations among consumers as well as the wide gap in optimism between consumers and business firms,” Curtin said. “One side anticipates a recession, while the other side expects an uninterrupted expansion in the year ahead.”
He added that few consumers expect significant increases in inflation, unemployment, and interest rates in the near future.
“Personal spending will be energized by record favorable evaluations by consumers of their personal financial situation, with gains expected across the entire income distribution, net increases in household wealth, the renewed appeal of price discounting, and reduced mortgage rates,” Curtin said.
New Residential Sales Data
In a separate housing report on Tuesday, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly said (pdf) that new home sales dropped 0.7 percent to a seasonally adjusted annual rate of 733,000 units last month, held down by decreases in activity in the South and Northeast regions.
September’s sales pace was revised higher to 738,000 units, the highest since July 2007, from the previously reported 701,000 units.
The median new house price fell 3.5 percent to $316,700 in October from a year ago. Sales last month were concentrated in the $200,000-$400,000 price range. Homes priced below $200,000, the most sought after, accounted for only 9 percent of sales.
The Fed last month cut rates for the third time this year and signaled a pause in the easing cycle that started in July when it reduced borrowing costs for the first time since 2008.
The 30-year fixed mortgage rate is currently at 3.66 percent, still below its peak of 4.94 percent in November 2018, according to data from mortgage finance agency Freddie Mac.
About two-thirds of the houses sold last month were either under construction or yet to be built.
Reuters contributed to this report.