US: Slipping confidence finds foothold with first rise in four months

An uptick in November puts consumer confidence at just 102.0, its second-lowest reading of the year. The move was largely driven by expectations and offered a mixed take on the labor market. Still, recession expectations receded and consumers have not put off their big holiday shopping plans.

Confidence bounces but households barely optimistic

Consumer confidence bounced in November, rising 2.9 points to a reading of 102.0 (chart). The gain came after three consecutive monthly declines, and was driven entirely by a jump in consumers expectations. The expectations component rose 5.1 points to 77.8, and while the measure of current conditions slipped, it fell by less than half a point to a reading of 138.2. While there was some bounce in the headline figures, at 102.0 confidence is at the second-lowest reading of the year. In other words, households are barely optimistic.

Concern of recession has continued to recede with the perceived likelihood of recession over the next year falling to the lowest level since August 2022, but that's still equivalent to two-thirds of respondents anticipating a downturn. Overall confidence also remains quite low, with the total index still about 12 points off its recent high notched five months ago and nearly 30 points below the average value that prevailed for the two years that preceded the pandemic.

Consumer views on the labor market are turning sour as they increasingly view jobs as “hard to get”. As seen in the nearby chart, this measure is still quite low by historic standards, but it reached the highest level since mid-2021 in November and is trending higher. Interestingly, the spoiling jobs market perception coincides somewhat with the recent uptick in continuing claims for unemployment insurance, which also hit the highest reading since late 2021 earlier this month. The labor differential, or difference between consumers who view jobs as “plentiful” less “hard to get” barely budged last month rising a tenth to 23.9. Our read: the overall job market is still tight, but slack is materializing as there is increasing evidence that it's growing more challenging to find new positions.

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