The Conference Board reported Tuesday that its consumer confidence index sank to a reading of 109.5, down from 111.6 in October. It was the lowest reading since the index stood at 95.2 in February and would not include the ramifications of omicron, a new variant of the coronavirus that has begun to spread.
The Conference Board asserted that concerns about rising prices, and to a lesser degree, lingering worries about the delta variant, were the primary drivers of the deterioration.
“Consumer confidence moderated in November, following a gain in October,” said Lynn Franco, senior director of economic indicators at The Conference Board. “Expectations about short-term growth prospects ticked up, but job and income prospects ticked down.”
“Concerns about rising prices – and, to a lesser degree, the Delta variant – were the primary drivers of the slight decline in confidence,” she added. “Meanwhile, the proportion of consumers planning to purchase homes, automobiles, and major appliances over the next six months decreased.”
“The Conference Board expects this to be a good holiday season for retailers and confidence levels suggest the economic expansion will continue into early 2022,” Franco stated. “However, both confidence and spending will likely face headwinds from rising prices and a potential resurgence of COVID-19 in the coming months.”
The measure predates the emergence of a new variant of the coronavirus, named Omicron. Markets turned down early Tuesday, with the Dow Jones Industrial Average off more than 200 points following remarks from Moderna CEO Stephane Bancel that its existing vaccines may not prove as effective against the new variant.
Federal Reserve Chairman Jerome Powell sounded some caution in remarks prepared for his testimony before the Senate Banking Committee.
“The recent rise in COVID-19 cases and the emergence of the omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation,” Powell said. “Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions,” Powell added.
Powell’s comments, coming close to the end of his brief remarks, were in sharp contrast to his otherwise positive tone noting that “the economy has continued to strengthen” despite a temporary blip brought on by the emergence of the delta variant this summer.
This week, there was an even larger drop in the University of Michigan's gauge of consumer sentiment, which fell in November to a decade-low, for many of the same reasons.