U.S. consumer sentiment declined unexpectedly in early November as households worried about their finances, the resurgent COVID-19 pandemic and the depleted fiscal stimulus, dimming the economy’s outlook as the curtain started to close on a challenging year.
The University of Michigan’s preliminary sentiment index for November decreased to a three-month low of 77 from a final October reading of 81.8, data released Friday showed.
The measure of expectations dropped by nearly 8 points to 71.3, while a gauge of current conditions was little changed at 85.8. Interviews conducted following the election recorded a substantial negative shift in Republicans’ expectations and no gain among Democrats. A measure of expectations among Republicans declined to 76.4 from 96.4. It edged up to 69.3 from 68.6 among Democrats. The survey began Oct. 28 and concluded late on Nov. 10.
Daily new coronavirus cases have been exceeding 100,000, with hospitalizations and deaths surging, prompting some state and local governments to impose new restrictions on businesses. Restrictions and consumer avoidance of crowded places could trigger another wave of layoffs and further squeeze incomes following the loss of a government weekly unemployment subsidy.
A weekly unemployment supplement, which was part of more than $3 trillion in government coronavirus relief, has lapsed for millions of unemployed and underemployed workers. A second rescue package is unlikely before 2021.
Economists expect consumer sentiment will trend lower despite promising developments on experimental vaccines.
Stocks on Wall Street rose on upbeat results from Walt Disney Co DIS.N and Cisco Systems Inc CSCO.O. The dollar .DXY dipped against a basket of currencies. U.S. Treasury prices fell.