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US buyer self-confidence fell in November, with inflation and economic uncertainty persisting and potentially threatening to disrupt sailing plans.
The Convention Board's consumer self-confidence index measured 10.2 for the month, down from the revised 102.2 in October. The index is at its lowest level since July, when it fell to 95.7 amid rising gas expenses and worsening inflation. A score above 100 indicates a confident outlook on the financial system and a better propensity to spend.
Economists had expected a 100% analysis for November, according to consensus estimates at Refinitiv.
This is the second consecutive month that the number in the headlines has fallen, likely due to the recent increase in gas prices, said Lynn Franco, senior director of economic indicators at the Board of Directors.
And consumer assessments of short-term economic situations continue to look gloomier. The Current Circumstances Index, which measures how patrons feel about the existing business and labor market circumstances, decreased from 138.7 to 137.4; and the Expectations Index fell from 77.9 to 75.4.
“Inflation expectations skyrocketed during that month of July, with spending on gasoline and food being the main culprits,” Franco said in a statement. “Intentions to buy expensive buildings, cars, and appliances cooled. The aggregate of increases in inflation and activity prices will continue to pose challenges to confidence and the financial boom in early 2023.”
As broader economic uncertainty grows, consumers appear to be approaching the fashion-breaking season with a “prudent stance,” said J. Walker Smith, talent leader for Kantar’s global consulting division.
“People are moving in and out a little bit to try to reduce their exposure to future uncertainty,” Smith told CNN Business in an interview. “But they’re not yet organized to panic. There’s no real sense of alarm among consumers at the moment.”
Consumer spending is a major driver of the economic climate, and the last two months of the 12 months can account for about 20% of total retail earnings and much more for some retailers, according to the National Retail Federation. NRF projects that break earnings could grow in the range of 6% to 8%, reaching US$$ 960.4 billion. In 2021, earnings in the range were $ 889.3 billion.
The 2022 holiday season kicked off at stores the previous weekend, with customers returning to outlets to snag bargains – and in some areas, even "porta-busters" have made a comeback.
But consumers are looking on amid stubbornly excessive inflation, which is spreading like a ghost of the rampant inflation of the 1970s and 1980s.
In addition to the fact that, due to the strong job market, the valued clientele is generally in a fairly reliable financial situation, Smith said. Clients have had reductions and job protection to help function as an aid, he said.
“"If we had a mix of better costs and higher unemployment at the same time, I think we would be seeing a very different buyer than we see now," he pointed out.
Although buyer self-confidence has fallen, it remains fairly resilient; but it is not likely to end, said Chris Rupkey, chief economist at FwdBonds LLC, in a statement on Tuesday. Federal Reserve officials noted that they intend to raise interest rates in the coming months in the fight to curb inflation and weak demand.
“"At some point, the economy will collapse, and with the intention of taking the wind out of the sails of customers all at once," said Rupkey.
The latest surge in inflation, which has moderated slowly in recent months but remains elevated at 7.7% in October, appears to be influencing shoppers' purchasing choices, Claire Tassin, a retail and e-commerce analyst at Morning Consult, told CNN's chief business correspondent Christine Romans on Monday.
People are giving more gift cards and cash, in addition to clothing, specialty meals, and other items, she said. To make these purchases, she added, Americans are lowering their discounts and relying on credit cards.
“"We are seeing many people relying on discounted rates and debt to pay for many of these purchases," Tassin pointed out.
