Consumer confidence rebounded in November after five consecutive months of losses. The Conference Board's Consumer Confidence Index was 84.1, up 4.5 points from the revised 79.6 in October. The Index is just below the November 2001 reading of 84.9, and nearly met economists' expectations of 84.5. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence increased across both portions of the Conference Board index. The Expectations portion of the index, a measure of future economic activity, was responsible for most of the overall increase. The index score of 88.4 was a 7.5-point gain from October.
Present Conditions, another factor in the total composite index, increased slightly to 77.6 from 77.2 in October. This index measures how consumers perceive the current state of the economy.
The University of Michigan's Consumer Sentiment Index, a comparable index, also increased in November to 84.2 from 80.6 in October. Both component indices gained. The Present Conditions portion was up 0.7 points in November to 93.1. The Expectations Index increased to 78.5 from 73.1 in October.
November's rebound in consumer confidence is encouraging for the holiday retail spending outlook. Economists' credit the improved consumer confidence to several factors, including the Federal Reserve's recent rate cut, improvement in equity prices, and generous discounting and financing options at stores. In addition, income and wage growth has improved over the past several months. However, rising debt, declines in wealth and little pent-up demand remain risks to the outlook for future consumer spending.
Overall, economists are optimistic for consumer spending during the holiday season with predictions of moderate growth from last year. Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence is closely watched as a critical component for economic recovery.
Sources: www.conference-board.com
www.economy.com
