US households show declining confidence as labor market slows and economic uncertainty rises, fueling expectations of potential Federal Reserve rate cuts.

Consumer confidence in the United States plunged in November, hitting its lowest point since April 2025, as Americans grew increasingly concerned about the labor market, inflation, and overall financial stability. The decline comes in the wake of the recently ended federal government shutdown, which added uncertainty to economic conditions.

November Consumer Confidence Index Shows Sharp Decline

The Conference Board reported that its Consumer Confidence Index fell to 88.7 in November, down from an upwardly revised 95.5 in October. Economists surveyed by Reuters had anticipated a smaller decline to 93.4, indicating that consumer sentiment deteriorated more than expected.

Dana Peterson, Chief Economist at the Conference Board, highlighted key concerns cited by respondents:

• Inflation and rising prices
• Tariffs and international trade tensions
• Political uncertainty and the federal government shutdown

Peterson noted that while references to the labor market eased slightly, they remained a major factor affecting consumer sentiment. Overall, November’s responses reflected a slightly more negative outlook compared to October.

Confidence Across Income Brackets

Consumer confidence dropped across nearly all income groups. Households earning less than $15,000 annually showed a minor improvement but remained the segment with the lowest confidence levels. Mid- and higher-income households exhibited increased caution regarding major purchases, reflecting widespread economic uncertainty.

Impact of the Slowing Job Market

The decline in confidence coincides with a slowing labor market. The September jobs report showed the US economy added only 119,000 jobs, while the unemployment rate edged up 0.1 percentage point to 4.4%.

The recent government shutdown, the longest in US history, complicated efforts to collect and analyze economic data, leaving policymakers with a limited picture of current conditions. Jennifer Lee, Senior Economist at BMO, commented,

“More worries about what lies ahead… hence, putting purchases for major items on hold.”

Implications for Federal Reserve Policy

The drop in consumer confidence adds to growing speculation that the Federal Reserve may lower interest rates to support the economy. Fed Governor Christopher Waller recently indicated that the weakening labor market may justify a quarter-point rate cut in December, though further action will depend on delayed economic data from federal agencies.

Analysts warn that continued uncertainty in consumer spending could slow economic growth in the coming months and may influence the Fed’s monetary policy decisions well into 2026.

Key Takeaways

• The Consumer Confidence Index fell to 88.7, the lowest since April 2025.
• Concerns include jobs, inflation, tariffs, and political uncertainty.
• A slowing labor market and recent government shutdown contributed to the decline.
• Potential Fed rate cuts are expected as policymakers respond to weakening economic signals.
• Low confidence may affect major purchases and consumer-driven economic growth.