Core Data: Confidence Index Hits New Low Since April

A new survey released by the Conference Board on Tuesday showed that the consumer confidence index fell 6.8 points from the previous month to 88.7 in November, the lowest level since the United States imposed comprehensive tariffs in April. The report noted that inflation remaining well above the Federal Reserve's 2% target, coupled with signs of slowing hiring activity, jointly weakened households' assessments of the economic outlook.

Among the various indicators composing the overall index, labor market conditions, business environment, household income, and the other two major subcomponents all declined. Dana Peterson, chief economist at the Conference Board, said in a statement that respondents in their written replies "mainly mentioned prices and inflation, tariffs and trade, and political factors." She added: "Consumers' pessimism about business conditions over the next six months was particularly pronounced, while expectations for household income growth contracted sharply."

Corroborated by University of Michigan Survey

The Conference Board's report is consistent with the consumer survey results from the University of Michigan. The latter found that inflation and personal income pressures pushed consumer confidence to one of the lowest levels on record this month. University of Michigan researchers noted that consumers generally believe their purchasing power is weakening. This month, consumers' perceptions of their current personal financial situation and conditions for buying durable goods both fell by more than 10%.

Retail Sales Growth Sluggish, September Data Miss Expectations

Consumer spending had already shown signs of weakness at the end of the previous quarter. Data released by the U.S. Commerce Department on Tuesday showed that retail sales rose 0.2% month-over-month in September, below market expectations, dragged down by a pullback in spending on goods subject to import tariffs, such as clothing and electronics. The data was delayed by several weeks due to the 43-day federal government shutdown.

Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, said in a client note on Tuesday: "Underlying retail sales in September were much weaker than in previous months." He added: "These data are mostly old news by now, but a wide range of high-frequency and survey indicators show that spending growth has slowed markedly so far in the fourth quarter. The sluggish labor market, along with tariff-driven price increases continuing to weigh on real incomes, suggests this slowdown may persist."

Impact on Fed Policy Path

Signs of deteriorating consumer sentiment could increase the likelihood that the Federal Reserve will cut its benchmark interest rate by 25 basis points at its December 9-10 policy meeting. Several policymakers have already expressed support for further lowering borrowing costs to avoid further weakening in the labor market.

Employment and Unemployment Rate Outlook

A survey released Monday by the National Association for Business Economics showed that the pace of hiring is expected to slow from an average of 55,000 per month in the second quarter to 23,000 in the fourth quarter. Correspondingly, the unemployment rate could rise from 4.4% in September to 4.5% by the end of the year.

Ed Yardeni, president of Yardeni Research, said in a report on Tuesday that the rise in the unemployment rate "mainly stems from a recent surge in unemployment among recent college graduates, which is related to the rapid adoption of artificial intelligence." He added: "A similar situation may occur in 2026."