November 25, 2025
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The Conference Board reported that consumer confidence fell 6.8 points in November to 88.7 after having declined 0.1 point in October. Consumer confidence reached a peak in November of last year at 112.8 but it has fallen steadily for most of this year.
Senior Economist at the Conference Board, Dana Peterson, said, “Consumer confidence tumbled in November to its lowest level since April after moving sideways for several months. All five components of the overall index flagged or remained weak. The Present Situation Index dipped as consumers were less sanguine about current business and labor market conditions. The labor market differential—the share of consumers who say jobs are ‘plentiful’ minus the share saying ‘hard to get’—dipped again in November after a brief respite in October from its year-to-date decline. All three components of the Expectations Index deteriorated in November. Consumers were notably more pessimistic about business conditions six months from now. Mid-2026 expectations for labor market conditions remained decidedly negative, and expectations for increased household incomes shrunk dramatically, after six months of strongly positive readings.”
We have a hard time getting as pessimistic as what this index has been indicating. The stock market is at a record high level. The economy keeps cranking out a small number of new jobs although the pace of job creation has slowed down. AI is boosting growth in the investment spending component of GDP. We expect GDP gsrowth of 3.3% in the third quarter. Look for GDP growth next year of 2.9%.
Given the magnitude of the earlier declines in confidence earlier this year one might have expected a sharp pullback in consumer spending. But that has not happened. Instead, real consumer spending has risen 2.7% in the past year. With real disposable income rising 1.9%, we expect consumer spending to climb by 1.8% in 2026.
The reason why spending has not pulled back this time is presumably because of the impressive increase in household net worth. Drive by the rapid increase in stock prices and a 50% increase in home prices in the past five years, consumer net worth has risen rapidly to a record high level. This provides a psychological boost to middle and upper income families who own stocks and bonds. Lower income families are struggling and cutting back on spending where they can.
Confidence data reported by the Conference Board are roughly matched by the University of Michigan’s series on consumer sentiment. As shown in the chart below, trends in the two series are identical but there can be month-to-month deviations.
Stephen Slifer
NumberNomics
Charleston, SC
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