US consumer confidence falls again

US consumer confidence fell to its lowest level in four months during November, with households less willing to spend on high-value items in the next six months amid high inflation and rising borrowing costs, which increases the risks of a recession next year.

The Conference Board’s Consumer Confidence Index fell to 100.2, the lowest reading since July, from 102.2 in October. Economists polled by Reuters had forecast a figure of 100 points. Even so, the index remains above the minimum of 85.7 points registered during the first wave of the Covid-19 pandemic.

The organization’s survey also showed that consumers remain optimistic about the job market, which may limit some of the expected economic slowdown. The job market is holding up despite large interest rate hikes by the Federal Reserve (Fed), which has helped keep consumer spending and the broader economy afloat.

The Fed has increased its official interest rate by 375 basis points this year, which has gone from a range close to zero to one between 3.75 and 4.0%, in what has become the fastest rate hike cycle since the 1990s. 80.

The trend of weakening confidence heralds a recession that is likely to hit next year (…) However, this could be short and shallow, given the tight labor market and the indication that the layoffs will not be as severe as expected fear,” said Jeffrey Roach, chief economist at LPL Financial.

The decline in confidence was concentrated in the age group 55 and over, as well as in households with annual incomes of less than $50,000. Households with lower incomes have borne the brunt of high inflation of 7.7% per year registered in October.

Confidence declines were largest in Pennsylvania, Ohio, and Michigan, which offset increases in Texas, New York, Florida, and Illinois.