24 November 2022 | Other

Consumers still lack confidence in the U.S. economy in the run-up to the holiday season

The state of the U.S. economy is considered to be uncertain ahead of the holiday season. 

The University of Michigan's Consumer Sentiment Index hit 56.8, as of November. The indicator exceeded market forecasts of 54.7, while being lower than 59.9 recorded in October. In fact, the Refinitiv consensus estimate suggested the index could reach 55. 

The market witnesses factors that hinder the growth of consumer activity. These include income resilience, particularly among low-wage workers, contributing to their resistance to price spikes. This is reported by Joanna Hsu, director of consumer surveys at the University of Michigan. However, weaker labor market conditions might be pushing shoppers to cut spending in the short term. The wealthiest households, for instance, have already seen stock markets plummet, depressing home values and having a negative impact on their willingness to spend. 

The survey showed that consumers felt pressure to buy real estate, cars, and other luxury goods as a result of rising interest rates. Earlier, the Federal Reserve (Fed) tightened monetary policy in an attempt to combat high inflation in the US with a series of successive interest rate hikes.

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