Key Takeaways
- Consumer confidence dropped to 88.7 in November, hitting the lowest level since April
- The decline was steeper than economists’ projections of 93.4
- Inflation expectations rose to 4.8% as recession signals persist
American consumer confidence experienced a sharp decline in November, falling more than expected and reaching its lowest point since spring. The Conference Board’s index dropped to 88.7 from October’s revised 95.5, significantly below the 93.4 reading economists had forecast.
What’s Driving the Pessimism
According to Dana Peterson, chief economist at The Conference Board, consumers cited several key concerns in their write-in responses. “Consumers’ write-in responses pertaining to factors affecting the economy continued to be led by references to prices and inflation, tariffs and trade, and politics, with increased mentions of the federal government shutdown,” Peterson said.
She noted that while labor market mentions eased slightly, the overall tone from November responses was “slightly more negative than in October.”
Across Demographic Groups
The confidence decline affected nearly all income levels, with only consumers earning under $15,000 showing improvement – though they remained the least optimistic group. Politically, independent voters showed the sharpest decline in confidence.
Age-wise, confidence improved among those under 35 but fell for older age groups. Respondents aged 55 and up remained the most pessimistic.
Recession Warning Signals
The report contained concerning recession indicators. The Expectations Index has remained below 80 for 10 consecutive months – the threshold that signals a potential recession ahead. Consumers’ inflation expectations for the next year rose to 4.8%.
All three components of the Expectations Index deteriorated in November, with particular pessimism about business conditions six months from now. The Present Situation Index also declined as consumers grew more negative about current business and labor market conditions.
Economists Weigh In
Raymond James chief economist Eugenio Aleman commented: “The Consumer Confidence Index was much lower than expected in November, with Americans mentioning the shutdown, prices, inflation, trade, tariffs and the political situation as factors in the decline. This result is in line with our weaker consumer demand expectation during the last quarter of the year.”
Jeffrey Roach, chief economist for LPL Financial, added: “Despite the lapse in official job data, the weakening complementary metrics such as this one will put pressure on the Fed to cut rates in December and continue cutting in 2026.”
