November 2017 Consumer Attitudes

Two popular measures of consumer attitudes were mixed in November 2017, but they both remain relatively elevated.  Consumer Confidence put out by the Conference Board hit a new 17-year high, reaching 129.5.  Consumer Sentiment from the University of Michigan declined to 98.5 from 100.7, the highest peak of the last decade.

Labor market strength is creating optimism.  Those surveyed by the Conference Board believe work is plentiful as only 16.9 percent describe jobs as currently hard to get; this same group also expects labor markets to remains strong in the future.  Those polled by the University also expressed confidence regarding employment, feeling more certain about both the availability of jobs and greater expectations for wages.

Consumers are not anticipating much inflation.  Participants in the Conference Board’s survey believe price pressures will continue decelerating.  Likewise, respondents to the Consumer Sentiment questions are growing more certain that inflation will neither accelerate in the near-term nor over the next five years.  This continues to be an interesting context as the Federal Reserve is in the middle of tightening monetary policy and is expected to ratchet up the overnight interest rate banks charge each other when the Federal Open Market Committee meets next week, something that is normally done to help combat accelerating inflation.

Consumers seem sanguine with the current state of the economy.  And why not?  America is in the midst of the third-longest economic expansion since the middle of the 1800s, and it could soon become the second-longest.  If these reported good feelings translate into consumption during the holiday season, merchants may not need to make drastic price cuts as the year comes to a close, setting up 2018 for inventory restocking.