Today's Report (11/30/2021)

The Conference Board Consumer Confidence Index decreased in November, following an increase in October. The Index now stands at 109.5 (1985=100), down from 111.6 in October. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell to 142.5 from 145.5 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell to 87.6 from 89.0.

“Consumer confidence moderated in November, following a gain in October,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “Expectations about short-term growth prospects ticked up, but job and income prospects ticked down. Concerns about rising prices—and, to a lesser degree, the Delta variant—were the primary drivers of the slight decline in confidence.

What is it?

Examines how consumers feel about jobs, the economy, and spending, placing more emphasis on household reaction to labor market conditions. It surveys different people every month, making it more erratic. It surveys expectations over the next 6 months.

What are the fundamental effects?

Confidence impacts consumer spending which affects economic growth. Happy consumers are good for business. An unhappy or insecure consumer is lousy for business. Any signs of a failing economy can set off alarms in Washington and Wall Street because consumer expenditure accounts for well over half of the economy’s total demand.

How does it affect the markets?

CURRENCY - A depressed consumer makes foreign investors with exposure in the US markets a bit nervous. It can raise the prospects of falling interest rates and a weakening business climate. They may sell the US currency in search of a stronger economy elsewhere.

STOCKS - Crumbling consumer confidence is not favorable to equities, because it can cause declining business sales. Shareholders hope consumer confidence stays high to encourage more spending.

BONDS - The focus is on whether economic growth goes overboard and leads to inflation. More confidence leads to more borrowing and spending, which can fuel faster economic growth and inflation. This can lead to bond prices declining.