U.S. consumer confidence fell to a reading of 96.1 in November as rising coronavirus cases pushed American optimism down to the lowest level since August.
The November reading released Tuesday by the the Conference Board said represents a drop from a revised 101.4 in October. The decline reflected a big drop in consumer expectations for income, business and labor market conditions.
“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,” said Lynn Franco, senior director of Economic Indicators for the Conference Board.
Consumer confidence is closely watched for signals it can provide of how willing households are to spend. Consumer spending accounts for 70 percent of economic activity in the U.S.
“We think the sharp rise in positive coronavirus cases nationwide, which has prompted new restrictions and shutdowns in many states, has led consumers to be more fearful of what lies ahead for them and their families as we head into the year-end holiday season,” said Chris Rupkey, chief financial economist at global financial group MUFG.
The consumer confidence index is set on a scale with 100 equaling the confidence level in 1985.
In the leadup to the pandemic with the country enjoying unemployment at a half-century low of 3.9 percent, the confidence index had risen above 130. It stood at 132.6 in February but plunged to 85.7 in April as millions of Americans lost their jobs after the country went into lockdown to try to halt the spread of the pandemic.
The index has bounced around since its big April decline but remains well below the levels seen before the pandemic hit.
For November, the present situations index, based on consumers’ assessment of current business and labor market conditions, decreased slightly to 106.2 from 105.9. However, the expectations index, based on consumers’ outlook for the future, declined from 98.1 in October to 89.5 in November.