The Conference Board’s Consumer Confidence Index increased in November 2024 to 111.7, the highest level since July 2023. The surge in confidence followed a swift and decisive outcome to the U.S. presidential election, ahead of which there was significant uncertainty and high risks of political violence. Strong confidence bodes well for Q4 2024 Gross Domestic Product.
Consumer Confidence Strengthened In November 2024
The Conference Board released a positive November Consumer Confidence Index® on November 26. The index rose by 2.1 points to 111.7 in November, up from 109.6 in October. It was a positive development that is supportive of growth.
According to the press release for the November 2024 Consumer Confidence Index, Dana M. Peterson, Chief Economist at The Conference Board, stated, “Consumer confidence continued to improve in November and reached the top of the range that has prevailed over the past two years.” Peterson added, “November’s increase was mainly driven by more positive consumer assessments of the present situation, particularly regarding the labor market.”
A swift and decisive outcome to the 2024 U.S. presidential election likely supported consumer confidence along with improvements in the labor market.
Strong Consumer Confidence Supports GDP Growth
The rise in November 2024 consumer confidence bodes well for other November economic data, including retail sales, personal spending, and even Q4 2024 GDP.
Consumption is the lion’s share of U.S. economic activity and GDP growth. In the second estimate report of Q3 2024 GDP, personal consumption expenditures accounted for 68.9% of total seasonally adjusted real GDP growth.
U.S. GDP growth in Q3 2024 was a solid 2.8%. Personal consumption expenditures increased by 3.5% on a quarter-over-quarter seasonally adjusted annual rate in Q3 2024, comprising 2.37 percentage points of the 2.8% Q3 2024 real GDP growth rate.
While recent U.S. GDP growth rates have been solid, the outlook for Q4 2024 is also solid — especially following the rise in November consumer confidence. After all, if consumer confidence remains high in the fourth quarter, personal consumption expenditures are likely to support Q4 2024 GDP. Based on data available through November 27, the Atlanta Fed GDPNow reflects expectations of Q4 2024 GDP at 2.7%.
Consumer Confidence Implications For Financial Markets
Strong U.S. consumer confidence is supportive of growth, business activity, equity valuations, and the dollar, even though strong consumption could provide the Federal Reserve with some breathing space regarding the timing of future rate cuts.
Fed Chair Jerome Powell noted on November 14 in Dallas, Texas, “The economy is not sending any signals that we need to be in a hurry to lower rates.” This certainly seems true, given the strength in consumer confidence. The strength or weakness of the November jobs report will also play a critical role in the future of Fed policy.
What do you think of the November consumer confidence report?
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