Inflation and pandemic fears hold back US consumer confidence, house prices cool

US consumer confidence fell to a nine-month low in November amid concerns about the rising cost of living and fatigue pandemicBut that probably won’t change expectations for stronger economic growth in the current quarter.

The Conference Board poll released Tuesday showed consumers are less excited about buying a home and expensive items like motor vehicles and major appliances over the next six months.

But consumers held their views on the job market, with the gap between those who say jobs are plentiful versus those who see them hard to come by expanding at a record high.

The Conference Board said its consumer confidence index fell to 109.5 this month, the lowest reading since February, from 111.6 in October. The survey was conducted before the discovery of the new variant of the COVID-19 omicron, which was announced last week by South African scientists.

Economists polled by Reuters estimated that the index would fall to 111. The measure, which puts more emphasis on the labor market, has fallen from a high of 128.9 in June. The decline was smaller than the University of Michigan survey of consumer confidence, which fell to a low of a decade this month.

This month’s data has suggested that the economy accelerated in the fourth quarter, with consumer spending rising in October. But the outlook for next year has been clouded by the omicron variant.

The Conference Board’s so-called labor market differential, derived from data on respondents’ opinions about whether jobs are plentiful or hard to come by, jumped to a reading of 46.9 this month, the highest on record, from 43.8 in October. This measure correlates closely with the unemployment rate in the employment report closely followed by the Labor Department.

Consumer inflation expectations for the next 12 months increased to 7.6% in November from 7.1% last month. The president of the Federal Reserve (Fed)Jerome Powell told lawmakers Tuesday that higher prices overall were related to the pandemic and warned that the risk of higher inflation had risen.

Rising inflation is beginning to influence consumer spending decisions, the Conference Board survey suggested.

Purchasing intentions for motor vehicles fell as did plans to purchase appliances, televisions, and refrigerators over the next six months. But they rose against the purchase of clothes washers and dryers.

The survey also showed that consumers are less willing to buy a home in the next six months. The slowdown in demand could help cool down house price inflation further.

A second report on Tuesday showed that the S&P CoreLogic Case-Shiller 20 metropolitan area home price index rose 19.1% year-on-year in September after rising 19.6% in August.

Signs that the rise in house prices was moderating were evident in a third report from the Federal Housing Finance Agency that showed that house prices rose 17.7% in the 12 months to September, after climbing. 18.5% in August.