|The rise in virus cases is clearly showing up in the economic data now. Last week, we wrote about how initial consumer sentiment for November, as measured by the University of Michigan, dipped because of a drop in future expectations.
Today, the Consumer Board released its numbers on consumer confidence. It showed a sharp decline in November – from 101.4 to 96.1. The drop was driven mostly by a fall in future expectations – similar to the consumer sentiment finding. Confidence in present conditions was mostly stable.
What this means: Consumer confidence and consumer sentiment are similar measures of how consumers feel about the economy at the present time and their outlook on the future. The better they feel about the current and future state of the economy, the more they are willing to spend.
The relatively large dip in consumer confidence in November came after a small decline in October and a strong rebound in September. Although higher than at the depths of the Great Pause in April and May, consumer confidence was still significantly below where it was prior to the pandemic even before November’s disappointing number.
What’s next: The drop in the University of Michigan’s consumer sentiment future expectations was largely driven by a decline in Republicans’ outlook after results of the election. A similar phenomenon could be at play with the consumer confidence number here. Furthermore, the news about three effective vaccines and new therapeutics was probably not widespread before the survey was conducted.
The virus still drives the economy, though. If the case numbers continue to rise across the country, the economy will suffer in the interim before the vaccine is widely applied.
—Curtis Dubay, Senior Economist, U.S. Chamber of Commerce