Last Update: 25-Nov-14 10:32 ET
- The Conference Board’s Consumer Confidence Index dropped to 88.7 in November from a downwardly revised 94.1 (from 94.5) in October. The Briefing.com consensus expected the index to increase to 96.0.
- The sharp decline in confidence was very unusual. Typically, confidence levels follow trends in employment, stock prices, and gasoline prices. All of those components moved in a decidedly positive direction in November. In fact, the strength in employment, equities, and gasoline was influential in driving the University of Michigan Consumer Sentiment Index to a seven-year high in the preliminary November reading.
- The Present Conditions Index declined to 91.3 in November from 94.4 in October. The Expectations Index fell even more, from 93.8 in October to 87.0 in November.
- Fortunately, consumption trends do not rely on confidence growth. As long as income continues to move in a positive direction, consumption growth should follow regardless of how consumer confidence trends.
- Consumer sentiment has little influence on consumption. As long as payroll levels continue to expand, the resulting income growth should keep consumption gains steady regardless of the monthly ebbs and flows in sentiment.
|Employment ('plentiful' less 'hard to get')
|1 yr inflation expectations