Consumers continue to lack confidence in the US economy ahead of the holiday shopping season | So Good News

Minneapolis
CNN Business
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Heading into the crucial holiday shopping season, American consumers are still not feeling confident about the state of the US economy.

The number of buyers for the University of Michigan has reached 56.8 in November, up from the previous reading of 54.7 measured earlier this month but lower than the 59.9 recorded in October.

Economists were expecting a reading of 55, according to consensus estimates on Refinitiv.

The month-over-month decline in sentiment erases about a third of the gains made since the index’s decline in June, according to Joanne Hsu, director of the Surveys of Consumers at the university.

“The headlines to consumer strength are beginning to emerge. Strong earnings so far have helped consumers, especially low-income workers, weather rising inflation,” Hsu said in a statement. “However, their perception of weakening labor markets may cause them to withdraw their investments in the future. Wealthy families are facing lower stock market and home prices, which may also increase their willingness to spend.”

Consumers surveyed also highlighted the impact of rising interest rates on their willingness to buy homes, cars and other big-ticket items. The Federal Reserve, in an effort to combat decades of inflation, has set interest rates high.

About 83% of people surveyed by the University of Michigan’s Surveys of Consumers said it was a bad time to buy a home. It is the largest field ever recorded, according to the university.

The survey also showed that consumer growth expectations for this year and five years remained unchanged at 4.9% and 3%, respectively. This is an important part of the Federal Reserve’s data. If consumers believe that prices will remain high, this will lead to an increase in wages, which will cause businesses to raise prices.

Earlier this month, when preliminary survey data was released, Hsu said that very few buyers were buying ahead to avoid future interest rate hikes. This was an indication that expectations were not rising, he said at the time.

However, Hsu said on Wednesday, uncertainty about these expectations remains high, “suggesting that the stabilization of these expectations is unlikely.”