2023 Consumer Confidence Index Hits 102 as Inflation Cools—What It Means for Your Finances

In November 2023, consumer optimism showed signs of strengthening as the Consumer Confidence Index (CCI) rose to 102, surpassing economists' projections and marking the first increase in three months. This uptick reflects growing hope among consumers despite ongoing concerns about inflation and economic challenges.

Key Insights

• The Consumer Confidence Index climbed to 102.0 in November, exceeding the revised 99.1 reading from October and beating the expected 101.0 forecast.
• The Expectations Index, which gauges future economic outlook, improved to 77.8, indicating consumers are increasingly hopeful about the months ahead.
• Conversely, the Present Situation Index slightly declined to 138.2, showing current economic conditions remain steady but cautious.
• Inflation expectations for the next 12 months dropped to 5.7%, down from 5.9% in October, highlighting easing price pressures experienced by shoppers.

According to Dana Peterson, chief economist at The Conference Board, improvements were noted across various income groups, although many consumers remain concerned about rising prices, geopolitical conflicts, and interest rate hikes. Notably, individuals aged 55 and older drove much of the confidence increase, while those aged 33 to 54 showed slightly less optimism.

Despite two-thirds of respondents anticipating a recession within the next year, the percentage expecting a downturn hit its lowest point in 2023, signaling cautious but improving sentiment.

Positive Inflation Trends Bolster Confidence

Lower inflation expectations have played a significant role in boosting consumer sentiment. The recent dip to 5.7% in anticipated inflation for the upcoming year suggests price pressures may be easing, which can encourage spending and economic growth.

This data precedes the upcoming release of the Personal Consumption Expenditures (PCE) index, a key inflation gauge that economists monitor closely for signs of persistent inflation or improvement.

Household financial outlooks also improved in November, with more consumers expecting better business conditions and job availability. This optimism towards the labor market supports a view of gradual economic growth despite current uncertainties.

Brad McMillan, Chief Investment Officer at Commonwealth Financial Network, remarked, "People remain somewhat worried about current conditions, but their outlook for the future is becoming increasingly optimistic. This suggests slower growth now but steady expansion moving forward into next year."

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