Economic Report: Consumer confidence deflates in November after record coronavirus surge

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The election of Joe Biden as president has increased confidence among Democrats, but not enough to counter growing worries about the record spike in coronavirus cases.

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The numbers: Consumer confidence fell in November to a three-month low after a record wave of coronavirus cases spurred some cities and states to reimpose restrictions and Americans took greater precautions.

The index of consumer confidence slipped to 96.1 this month from a revised 101.4 in October, the Conference Board said Tuesday. Economists polled by MarketWatch had forecast a decline to 97.3.

Confidence is still far below pre-pandemic levels. The index stood at 132.6 before the viral outbreak in February.

Read: Raging pandemic singes economy. Darker days ahead?

What happened: An index that tracks how consumers feel about the economy right now dipped to 105.9 in November from 106.2 in October — a surprisingly small decline given the explosion in new Covid-19 cases.

Another gauge that assesses how Americans view the next six months—the so-called future expectations index—fell more sharply. It dropped to 89.5 from 98.2 even though coronavirus vaccines are likely to be widely available by next summer.

“Heading into 2021, consumers do not foresee the economy, nor the labor market, gaining strength,” said Lynn Franco, senior director of economic indicators at the nonprofit board. “In addition, the resurgence of Covid-19 is further increasing uncertainty and exacerbating concerns about the outlook.”

Other measures of confidence, including the consumer sentiment survey and daily report by Morning Consult, also declined in November.

See: MarketWatch Coronavirus Recovery Tracker

Big picture: The erosion in consumer confidence comes as no surprise with the coronavirus spreading like wildfire, but the economy is still growing and companies are looking past the current problems.

A pair of surveys of business executives actually rose in November to a five-year high. Firms are preparing for a return to normal next year if a slew of pending vaccines turn out to be as effective as trials have shown. The end of the 2020 election and divided government has also eased their worries.

The U.S. could still suffer greatly between now and next year, though, and many economists say more financial relief from Washington is needed.

Read: U.S. businesses grow faster despite coronavirus spike

Market reaction: The Dow Jones Industrial Average DJIA, +1.30% and S&P 500 SPX, +1.21% rose in Tuesday trades.

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