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US Consumer Confidence Slumps in November as Short-Term Outlook Worsens

Jay Brahach November 24, 2020

The Conference Board’s Consumer Confidence Index missed expectations for November, falling to 96.1 against a measure of 101.4 in October.

In the aftermath of this release, the trade-weighted US Dollar Index (DXY) declined by 0.10 percentage points, a larger-than-usual response.

In recent months, much of the focus for consumers has been on the election. While we have consistently seen negative movements in consumer sentiment since the onset of the pandemic, till now the direct impact on US dollar strength has been somewhat negligible. It’s widely believed that in recent months market participants have been hesitant to react to data releases due to election uncertainty, but it seems that this has now somewhat dissipated.

Looking at current market conditions, consumers were largely unchanged from last month. Those claiming conditions were “good” declined from 18.6% percent to 17.6%. Those describing conditions as “bad” also declined from 34.4% to 33.5%, leaving the overall outlook constant.

The overall dip in consumer sentiment can be attributed to the short-term economic outlook, as the COVID-19 situation continues to worsen. As of yesterday, 85,700 patients were hospitalized across the US, and as we enter the Thanksgiving period, fears of virus spread are increasing.

Consumers expecting business conditions to improve in the next six months declined from 36% to 27.4%. Those expecting conditions to weaken increased from 15.9% to 19.8%.

In addition to this, the outlook for the job market also looks less than desirable, with the percentage of survey participants expecting more jobs declining from 32% to 25.9%.

While there has been much uncertainty surrounding the pandemic, the Trump Administration has finally agreed to begin the transition process, as the State of Michigan certified its election results yesterday. This is important for consumers as it gives President-elect Joe Biden access to the resources necessary to build a cohesive recovery plan.
Next year looks increasingly uncertain, but an end to the election circus may give some hope to consumers in the months to come.