American consumers are feeling more optimistic about the economy than they have in years, according to the latest data released by The Conference Board. The Consumer Confidence Index climbed from 111.3 in October to 111.7 in November, marking its highest point in nearly two years. This significant surge is largely attributed to a strengthening labor market and a noticeable decrease in anxieties surrounding a potential recession.
The improvement in consumer sentiment is primarily driven by the Present Situation Index, which reflects the current state of the business and labor market. This index experienced a remarkable 4.8-point jump to 140.9, signifying widespread belief in a robust job market. A significant portion of respondents – 33.4% – reported that jobs are ‘plentiful,’ a considerable improvement from October. Conversely, only 15.2% reported jobs as ‘hard to get’. This positive outlook extends to the future, with 21.7% of respondents expecting more job opportunities in the next six months – the most optimistic outlook on job prospects in nearly three years.
Dana M. Peterson, chief economist at The Conference Board, highlighted the labor market’s crucial role in boosting confidence. She stated, “November’s increase was mainly driven by more positive consumer assessments of the present situation, particularly regarding the labor market.” This positive sentiment is especially pronounced among younger Americans (under 35), who are largely responsible for the surge in confidence. However, confidence dipped slightly among the 35-54 age group after strong gains in October. Interestingly, optimism is highest among households earning over $100,000 and those under $35,000, while the wealthiest consumers ($125,000+) reported flat or slightly declining confidence.
Perhaps the most striking aspect of the report is the dramatic decline in recession fears. The expectation of a recession within the next 12 months has reached its lowest point since mid-2022. With the Expectations Index rising slightly to 92.3 (well above the critical 80 threshold often indicating an economic downturn), consumers exhibit minimal concern about an impending economic slowdown. Peterson further noted, “Consumers’ optimism for their finances over the next six months reached a new high, even as their assessments of their family’s current financial situation fell slightly.”
While optimism is high, spending patterns reveal a nuanced picture. Plans to purchase homes have plateaued, while auto-buying intentions saw a slight uptick. However, purchasing intentions for most appliances and electronics have decreased. Spending on services, particularly travel and healthcare, remains robust, indicating a shift in consumer priorities towards experiences rather than material goods.
Wall Street’s optimism seems to be mirrored on Main Street. A remarkable 56.4% of consumers now believe stock prices will rise in the next year – an all-time high for this metric. Only 21.3% anticipate a decline, a significant contrast to the bearish sentiment earlier this year. Furthermore, expectations for lower interest rates have increased, with over one-third of consumers (34.6%) believing rates will fall within the next 12 months – the highest figure since April 2020.
Inflation expectations continue to moderate, with consumers projecting 12-month inflation at 4.9%, down from 5.3% in October. This is the lowest reading since March 2020, suggesting growing confidence that price pressures are easing. While inflation mentions decreased in write-in survey responses, higher prices remain a significant concern for 2025. Consumers overwhelmingly expressed desires for lower prices and improved household finances, along with paying off debt, saving more, and reducing taxes.
The market’s reaction to the report was mixed. While the tech-heavy Nasdaq 100 and the S&P 500 saw gains, the Dow Jones Industrial Average slipped slightly. This mixed performance highlights the ongoing uncertainties in the market, particularly concerns surrounding potential tariffs on imports from Mexico and Canada, which are influencing investor sentiment.
