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Consumer confidence tumbles heading into the holidays

The drop coincides with a sharp rise in COVID-19 cases

Photo (c) Andriy Onufriyenko - Getty Images
Consumer confidence has fallen sharply as the nation’s retailers hope to make up some ground lost to the coronavirus (COVID-19) pandemic with a robust holiday shopping season.

The Conference Board’s overall Consumer Confidence Index declined only slightly, buoyed by long-term expectations for the economy. But as for the short-term, many people are significantly less optimistic.

The Expectations Index – based on consumers' short-term outlook for income, business, and labor market conditions – fell from 98.2 in October to 89.5 this month, a fairly significant one-month decline.

"Consumer confidence declined in November, after remaining virtually flat in October," said Lynn Franco, senior director of Economic Indicators at The Conference Board. "Heading into 2021, consumers do not foresee the economy, nor the labor market, gaining strength. In addition, the resurgence of COVID-19 is further increasing uncertainty and exacerbating concerns about the outlook."

Spike in COVID-19 cases

During the time that the survey was taken by Nielson, the country was recording more than 100,000 new cases of COVID-19 each day, the fastest rate since the beginning of the pandemic. The surge prompted governors in some states to renew restrictions on some businesses and to limit public gatherings.

The Conference Board notes that consumers have grown less optimistic about the short-term outlook for the economy and their personal circumstances. When asked if business conditions would improve over the next six months, only 27.4 percent said they would. In October, 36 percent gave an affirmative answer.

By the same token, those predicting things would get worse rose from 15.9 percent in October to 19.8 percent this month. The growing pessimism comes amid a record rally on Wall Street, with the Dow Jones Industrial Average closing above 30,000 for the first time on Tuesday.

Consumers' optimism about the job market also eroded in just the last month. In October, 32 percent expected to see more job opportunities in the months ahead -- this month only 25.9 percent do.

But the drop in confidence, at this point at least, doesn’t appear to be based on personal experience. While the percentage of consumers expecting an increase in income was virtually unchanged at 17.6 percent, there were fewer people who expect to lose income over the next few months.

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