WASHINGTON – U.S. consumer confidence fell in November following a big gain the previous month, as Americans became less bullish about the economy and jobs.
The Conference Board said Tuesday that its consumer confidence index fell to 88.7 in November, down from a seven-year high of 94.5 in October.
Conference Board economist Lynn Franco said that the decline primarily reflected weaker optimism in the short-term, with consumers less upbeat about current business conditions and the state of the job market.
But she added that expectations about future income remained virtually unchanged.
Private economists expect a quick reversal of the November drop, especially given the large declines motorists are seeing in gas prices.
A drop in gas prices acts like a tax cut, giving consumers more confidence and more money to spend on other items. The current nationwide average for a gallon of regular gas is $2.81, down from $3.07 just a month ago, according to AAA.
Paul Dales, an economist at Capital Economics, said the November decline in confidence was “hard to square with the recent improvement in households’ financial situations.”
The proportion of consumers saying business conditions were good decreased from 24.7 per cent to 24 per cent, while those claiming business conditions were bad increased from 21.3 per cent to 22.4 per cent.
Even with the decline from October, consumer sentiment at 88.7 was still significantly higher than the 72.0 reading of November 2013.
The steep recession, which claimed millions of jobs and made those still working fearful of further layoffs, pushed confidence down sharply for a number of years after the recession ended in June 2009. But steady hiring and fewer layoffs over the past 12 months have helped to boost morale. The unemployment rate dropped to 5.8 per cent in November, the lowest level since 2008.