The decline in consumer confidence in the U.S. reveals that economic uncertainty remains high
Bret Kenwell, U.S. investment analyst at eToro
- Consumer confidence continues to fall after the spike in November caused by the elections, and the most recent reading has reached its lowest level since June. Confidence has declined for the third consecutive month, missing economists' expectations in all cases.
- Economic uncertainty remains high, whether regarding tariffs or more U.S.-focused data such as inflation or retail sales. As a reminder, the latest CPI report showed inflation above expectations, which did not give investors or consumers the reassurance that price increases are slowing down.
- If there is a glimmer of hope in the consumer confidence report, it is that last month's figure was slightly revised upward and aligns with the trend we have observed in recent quarters. However, this month's lowest reading is not surprising given some of the recent macroeconomic events.
- Investors should keep an eye on this week's PCE report. Not only is it the Federal Reserve's preferred inflation indicator, but it will also provide another clue about how consumers feel regarding their purchasing power. A reading in line with or below expectations could serve as a relief catalyst for both consumers and investors.
