Economic Confidence Falls as Holiday Spending Plans Decline
The economic landscape in the U.S. experienced notable shifts in November, with consumers revealing heightened apprehensions about their financial futures. This apprehension coincided with recent events, such as a prolonged federal government shutdown and fluctuating stock market performance.
Economic Confidence Declines Sharply
Gallup’s Economic Confidence Index (ECI) fell seven points to -30 in November, marking the lowest level in 17 months. This decline reflects a diminishing optimism among Americans regarding their economic circumstances. Notably, 21% of U.S. adults rated current economic conditions as excellent or good, a drop from 24% in October. In stark contrast, 40% described the economy as poor, compared to 37% previously.
Perception of Economic Conditions
- Fewer than 30% believe the economy is improving.
- Two-thirds of respondents (68%) think the economy is worsening.
Deteriorating Job Market Sentiments
Concerns regarding job availability have also intensified. In November, only 33% of respondents indicated it was a favorable time to find a quality job, reflecting an eight-point decline since August. This sentiment is the most pessimistic recorded since early 2021.
Holiday Spending Projections Drop
According to recent surveys, Americans intend to spend significantly less on holiday gifts this year. The average estimated expenditure has fallen to $778, a reduction of $229 from October’s $1,007 and considerably lower than the previous year’s $1,012 estimate.
Income Disparities in Holiday Spending
| Income Level | Projected Holiday Spending (November) | October Estimate |
|---|---|---|
| Households earning $100,000+ | $1,230 | $1,479 |
| Households earning | $384 | $651 |
| Middle-income households | $842 | $847 |
Consumer Outlook on Spending Trends
Despite substantial cuts to predicted holiday spending, only 29% of Americans have stated they plan to spend less than they did last year. This figure, while up from 23% in October, remains considerably lower than the 46% recorded in November 2008. Despite this shift, the majority (53%) plan to maintain their spending at similar levels as the previous year.
Conclusion
In summary, consumer sentiment regarding the economy and job market reached its lowest point in over a year, impacting holiday spending forecasts. The prior federal government shutdown likely played a significant role in shaping these negative perceptions. Retailers may remain hopeful that, following the resolution of the shutdown, consumer attitudes will improve. Nevertheless, the current economic climate suggests a cautious approach among consumers this holiday season.
