Consumer confidence shows improvement

New York City The Conference Board released its November 2009 Consumer Confidence Index on Tuesday, which showed a slight increase from 48.7 to 49.5. The Index is still well below its September score of 53.4.

The Present Situation Index remained virtually unchanged, while the forward-looking Expectations Index edged up.

The Present Situation Index slightly dropped from 21.1 in October, to 21 in November, its lowest level since hitting 17.5 in February 1983. The percentage of consumers rating current business conditions as “bad” decreased from 46.7% to 45.7%, while the percentage rating current business conditions as “good” increased from 7.8% to 8.1%. Both these figures improved slightly from last month.

Meanwhile, the percentage of consumers saying jobs are currently “hard to get” increased from 49.4% to 49.8%, while those claiming jobs are “plentiful” decreased from 3.5% to 3.2%. Both these figures deteriorated moderately from last month.

In October, the Expectations Index, which tracks consumer confidence in the direction of the economy and labor market in the next six months, decreased by 6.7 percentage points, from 73.7 to 67. This month, the Expectations Index regained some ground, rising to 68.5. The percentage of consumers anticipating an improvement in business conditions during the next six months decreased slightly from 20.8% to 20.5%, but the percentage expecting conditions to worsen dropped more significantly from 18.2% to 15.1%.

The labor market outlook, which remained virtually flat in September and dropped in October, was slightly less pessimistic in November. The percentage of consumers expecting more jobs in the next six months declined from 16.8% to 15.2%, but the percentage expecting fewer jobs also decreased from 26.1% to 23.1%. The proportion of consumers expecting an increase in their incomes, which dipped last month from 11.2% to 10.7%, dropped again to 10%.

Lynn Franco, director of the Conference Board Consumer Research Center, said the moderate improvement in this month’s index was driven by fewer consumers expecting things to get worse, rather than by more consumers expecting things to get better. “Income expectations remain very pessimistic and consumers are entering the holiday season in a very frugal mood,” said Franco.

Most holiday spending forecasts have ranged from mediocre to negative. The Conference Board’s own forecast predicts the average U.S. household will reduce holiday spending by 6.6% this year. Several other major research firms have predicted holiday spending will remain flat compared with last year’s poor seasonal results.