Consumer confidence slides as Americans grow wary of high costs and sluggish job gains

U.S. consumer confidence plunged in November to its lowest level since April, as Americans grapple with the aftermath of the recent government shutdown, lackluster hiring, and persistent inflation pressures.

The Conference Board reported Tuesday that its consumer confidence index fell to 88.7 in November from an upwardly revised 95.5 in October. The sharp decline coincides with the period when President Donald Trump announced sweeping tariffs earlier this year, which triggered significant stock market volatility.

Survey data revealed growing wariness among Americans regarding high living costs and sluggish job market conditions. The percentage of consumers describing jobs as “plentiful” decreased to 27.6% from 28.6% in October, representing a steep drop from 37% recorded last December. Meanwhile, 17.9% of respondents described jobs as “hard to get,” slightly better than October’s 18.3%, but still worse than September’s 15.2%.

These employment perception metrics are closely monitored by economists as reliable predictors of hiring trends and unemployment rates in the coming months. The deteriorating outlook could signal weakness in the labor market, potentially complicating the economic picture heading into 2025.

“We do not think that consumer spending is about to hit a cliff, as spending has decoupled from confidence, but risks to the downside are increasing,” noted Thomas Simons, chief economist at investment bank Jefferies.

The Conference Board’s survey, which ran through November 18 (about five days after the government shutdown ended), indicated that consumers remain predominantly concerned about prices and inflation, tariffs and trade policies, and political uncertainty. Dana Peterson, chief economist at the Conference Board, highlighted increased mentions of the federal government shutdown among respondents’ written comments about factors affecting the economy.

The declining confidence poses potential political challenges for Trump and Republicans in Congress. The Conference Board noted that dimmer economic views were observed across all political affiliations, with particularly sharp declines among independent voters, a crucial demographic in recent elections.

Earlier Tuesday, a separate government report showed that retail sales slowed in September following robust readings during the summer months. The slowdown in consumer spending, which accounts for roughly 70% of U.S. economic activity, could portend economic headwinds in the final quarter of the year.

Economists project the U.S. economy likely expanded at a solid annual rate of approximately 3% during the July-September quarter. However, growth expectations for the October-December period have been substantially reduced, largely due to the disruptive effects of the government shutdown, which interrupted federal worker pay, disrupted contracts, and caused air travel disruptions.

Affordability concerns continue to weigh heavily on American households, reflecting issues that featured prominently in this month’s elections. With inflation remaining above the Federal Reserve’s target level for an extended period, consumers are increasingly feeling the squeeze on their household budgets, particularly for essential items like food, housing, and energy.

Market analysts will be watching closely to see if declining consumer confidence translates into reduced spending during the critical holiday shopping season, which traditionally accounts for a significant portion of annual retail sales. While the relationship between confidence metrics and actual spending behavior isn’t always straightforward, prolonged pessimism could eventually impact consumption patterns if combined with deteriorating labor market conditions.

The economic outlook remains uncertain as policymakers navigate the complex balance of taming inflation while preventing a significant economic slowdown that could potentially trigger broader recessionary concerns heading into 2025.