US Consumer Confidence drops again in November
2022.11.29 12:35
US Consumer Confidence drops again in November
Budrigannews.com – In November, consumer confidence in the United States fell to a four-month low. Households were less willing to spend on big-ticket items over the next six months due to high inflation and rising borrowing costs, increasing the likelihood of a recession the following year.
However, consumers’ continued optimism regarding the labor market was found in the Conference Board’s survey on Tuesday, which may mitigate some of the anticipated economic downturn.
Despite the Federal Reserve’s aggressive interest rate increases, the labor market has remained resilient, sustaining consumer spending and the economy as a whole.
Christopher Rupkey, chief economist at FWDBONDS in New York, stated, “The consumer is still bummed out about the economic outlook coming into the home stretch for the year, but the major worry hasn’t yet shifted from inflation with the rising prices of goods sitting on store shelves to the labor market or whether or not you can find or keep your job.”
“But that tectonic shift in consumer confidence from worries about inflation to worries about jobs is coming.”
‘The Meeting Board’s buyer certainty file tumbled to 100.2, the most reduced perusing since July, from 102.2 in October. The Reuters poll of economists had predicted that the index would reach 100.0.Nonetheless, the index is still higher than its COVID-19 pandemic lows. It places a greater emphasis on the still-tight labor market.
The 55-and-over age group and households with annual incomes below $50,000 saw the greatest drop in confidence. Pennsylvania, Ohio, and Michigan saw significant drops in confidence, but Texas, New York, Florida, and Illinois saw increases.
According to the survey, rising costs of gasoline and food contributed to consumers’ higher 12-month inflation expectations, which reached a four-month high of 7.2% from 6.9% in October.
In what has become the fastest rate-hiking cycle since the 1980s, the Fed has increased its policy rate by 375 basis points this year, moving it from close to zero to a range of 3.75 percent to 4.0%.
The so-called labor market differential of the survey, which is based on respondents’ perceptions of job availability and difficulty, increased to 32.8 from 31.8 in October. The Department of Labor’s unemployment rate is correlated with this measure.
However it has dropped from 44.7 last November, it remains very high by authentic guidelines.
According to Conrad DeQuadros, senior economic advisor at Brean Capital in New York, “The Fed’s strategy of attempting to reduce the availability of job openings relative to the supply of labor to put downward pressure on inflation does not appear to have made any progress in November based on this survey of households.”
According to the survey, fewer consumers were interested in making big-ticket purchases over the next six months as inflation continued to dominate consumers’ concerns. All over the place, the drop in intentions to buy raised hopes that the recent signs of goods disinflation might become ingrained and pointed to a slowdown in demand for goods.
That also goes along with the idea that the economy might go through a sharp growth slowdown or a mild recession in the first half of 2023.
The survey also found that fewer people planned to buy a house in the next six months.Increasing home loan rates and excessive costs have fundamentally diminished reasonableness for the overwhelming majority planned purchasers. Even though house prices have fallen from their all-time highs during the COVID-19 pandemic-driven housing boom, they are still very high.
The S&P CoreLogic Case-Shiller national home price index increased 10.6% in September year-over-year, down from 12.9% in August, according to a separate report on Tuesday. However, a floor will most likely remain below house prices due to limited supply.
According to Nicole Bachaud, a senior economist at Zillow in Seattle, “while buyers are stepping aside waiting for more affordable prices and rates, causing the slowdown on price growth,” prospective sellers “are sticking to their ground and holding tight to the inventory they currently own.”
Because of the limited supply of homes on the market, “as a result, prices might not continue to plunge down as much as some projections anticipate.”
After rising by 12.0% in August, house prices increased by 11% in the 12 months through September, according to the Federal Housing Finance Agency’s third report.
