WASHINGTON - Confidence among U.S. consumers rose less than anticipated in November, indicating the impending fiscal tightening may be starting to damp Americans’ moods.
The Thomson Reuters/University of Michigan final index of consumer sentiment was little changed at 82.7, a five-year high, from the prior month’s 82.6. The gauge was projected to rise to 84.5, according to the median forecast of 65 economists surveyed by Bloomberg. The preliminary reading was 84.9.
President Barack Obama and lawmakers have started negotiations to avoid the so-called fiscal cliff, more than $600 billion of tax increases and government cutbacks scheduled to take effect next year. Less optimism among consumers threatens to weigh on household purchases at the start of the holiday shopping season, which kicks off after Thanksgiving tomorrow.
“The fiscal cliff rhetoric has really picked up in the mainstream media,” Jacob Oubina, senior U.S. economist at RBC Capital Markets LLC in New York, said before the report. “The average person is probably paying more attention to the fiscal cliff now. They’re concerned about the outlook for the economy and for their own pocketbooks.”
Estimates for the confidence measure ranged from 79.5 to 86, according to the Bloomberg survey. The index averaged 64.2 during the last recession. It averaged 89 in the five years before the 18-month economic slump that ended in June 2009.
The report compares with Bloomberg’s weekly Consumer Comfort Index, which eased to minus 33.9 in the period ended Nov. 18 from minus 33.1. At the same time, Bloomberg gauge of consumer expectations, which rose to 4 in November from minus 7 a month earlier. The monthly reading showed 37 percent of households projected the economy will get better, the highest share since March 2002.
The Michigan survey’s index of current conditions, which reflects Americans’ perceptions of their financial situation and whether it is a good time to buy big-ticket items like cars, climbed to 90.7 from 88.1 the prior month. The preliminary reading was 91.3 for November.
The index of consumer expectations for six months from now, which more closely projects the direction of consumer spending, dropped to 77.6 from 79 in October. The preliminary November reading was 80.8.
Consumers are benefiting from rising house values as record-low mortgage rates drive a recovery in housing. Sales of previously owned homes unexpectedly climbed in October, and the median price rose 11.1 percent from a year earlier, the National Association of Realtors reported this week.
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.