It’s hard to imagine how today’s Consumer Confidence report for the month of November could have been weaker. While economists were expecting the headline index to come in at a level of 99.5, the actual reading was 9.1 points weaker at 90.4. To put this miss in perspective, there have only been seven reports since 1999 where the report missed expectations by a wider margin. This month’s decline also took the headline index back below its long-term average of 93.4 to the lowest reading since September 2014.
As if the headline index wasn’t bad enough, consumers’ feelings towards the jobs market have also weakened. In this month’s report, the ‘Jobs Plentiful’ component fell by 2.8 points to 19.9, and that follows a 2.1 point decline in October. Over the last two months, this component has now dropped by 4.9 points, which is the largest two-month decline since November 2001 in the wake of the 9/11 attacks.
One of the more interesting aspects of Consumer Confidence lately has to do with trends based on income levels. At the end of Q1, Consumer Confidence among consumers with incomes above $50K stood at 128.41, while confidence among consumers with incomes between $35K and $50K was at a level of 85.93. Since then, confidence among higher income consumers has declined to 111.6 while confidence among the lower-income consumers has increased to 93.7. Even after the big shift, confidence among higher income consumers still exceeds confidence of consumers with lower incomes, but the gap has narrowed considerably. In the chart below, we show the historical spread between confidence among the two income levels on a six-month moving average basis. After hitting a high of 32.42 at the end of May, this spread is now down to 21.99. Throughout this recovery, one constant theme has been that the recovery was leaving lower income consumers behind, but after several years, it appears as though consumers with lower incomes are starting to catch up.