Consumer confidence/ U.S. economy/ inflation outlook/ job market/ tariff impact/ WASHINGTON/ Newslooks/ J. Mansour/ Morning Edition/ U.S. consumer confidence rose in November, driven by optimism about hiring and reduced inflation expectations. The Conference Board reported a confidence index increase to 111.7, signaling potential for continued robust consumer spending. However, economists warn that new tariffs proposed by President-elect Donald Trump could lead to inflationary pressures, potentially dampening this optimism.
U.S. Consumer Confidence Rises on Hiring and Inflation Outlook
Quick Looks
- Confidence Index: The Conference Board’s index increased to 111.7 in November, up from 109.6 in October.
- Hiring Optimism: Expectations for job growth reached their highest level in nearly three years.
- Inflation Expectations: Consumers foresee the lowest inflation since March 2020.
- Tariff Concerns: Economists warn Trump’s proposed tariffs could lead to inflationary pressures.
Consumer Confidence Rises Amid Optimism on Jobs and Inflation
Deep Look
Consumer confidence among Americans edged higher in November, buoyed by hopes for job growth and easing inflation, according to a report from The Conference Board released Tuesday. The consumer confidence index rose to 111.7, up from 109.6 in October, marking a continuation of the upward trend seen last month.
This increase reflects a brighter outlook for economic conditions, particularly in hiring. Optimism about job availability reached its highest level since early 2022, while fears of a potential recession dropped to their lowest point since the survey began asking about it in mid-2022.
Spending and Economic Growth
The uptick in consumer confidence could translate into stronger economic activity, as higher confidence levels often correlate with increased consumer spending. For much of the past two years, Americans have maintained strong spending habits, even as confidence indices lagged behind, showing a somewhat disconnected relationship between sentiment surveys and real-world economic behavior.
Inflation Expectations Drop
The report also noted that consumers’ inflation expectations have declined, reaching their lowest point since March 2020. With inflation easing, many Americans expressed greater optimism about their financial prospects heading into 2025.
“When asked about their hopes for the coming year, lower prices emerged as the top wish among consumers,” said the Conference Board in its report.
Impact of Tariffs on Consumer Confidence
Despite the upbeat sentiment, looming economic risks could shift the outlook. President-elect Donald Trump recently announced plans to impose a 25% tariff on imports from Canada and Mexico and an additional 10% tariff on goods from China. Economists warn that such policies, if enacted, could spark inflation and strain household budgets.
“Households for now seem to have their heads in the sand about the potential price hikes from tariffs and deportations,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, in a note to clients.
Partisan Shifts in Sentiment
The Conference Board does not break down its data by political affiliation, but similar surveys, such as the University of Michigan’s consumer sentiment index, have shown significant increases in economic optimism among Republicans following Trump’s election victory. This could partly explain the improved confidence seen in November’s data.
Economic Uncertainty Ahead
While current optimism is promising, the potential inflationary effects of tariffs and uncertainty around broader economic policies could test consumers’ resolve in the coming months. For now, however, Americans appear cautiously hopeful about the state of the economy and their job prospects.
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