U.S. consumer sentiment unexpectedly declines on economic outlook

U.S. consumer confidence unexpectedly declined in early November as an increase in Covid-19 infections and the election prompted Americans to reassess their economic and financial outlook.

The University of Michigan’s preliminary sentiment index for November fell to a three-month low of 77 from a final reading of 81.8 in October, data showed Friday. The median estimate from Bloomberg’s survey of economists called for a reading of 82.

The expectation measure fell nearly 8 points to 71.3, while a current conditions gauge changed little at 85.8. Interviews conducted after the election recorded a substantial negative change in Republicans’ expectations and no gain among Democrats. The investigation began on October 28 and ended on November 10.

“Republicans are now expressing the least favorable economic expectations since Trump took office, and Democrats have expressed more positive expectations,” Richard Curtin, director of the investigation, said in the report. “In the coming months, the partisan divide is likely to widen, although gains will be limited until a potential vaccine is approved and widely distributed. ”

Consumers’ opinions about their current financial situation have deteriorated, well below pre-pandemic peaks, according to the report. Net declines in household income were reported in early November for the first time since March 2014, with the largest decline among low-income households and older Americans.

Less optimism about the state of the economy could dampen the outlook for the holiday shopping season amid a surge in new viral infections across the country. The rise in the number of cases could weigh on sentiment in the coming months as some cities and states reinstate more restrictive measures.

Another report released Thursday showed that the modest momentum of the labor market recovery remains intact, with initial jobless claims falling the most in five weeks.