Today's release of Consumer Confidence missed estimates by a pretty big margin. While economists were looking for a level of 96.0, which would have represented a modest increase from October's reading of 94.1, the actual reading came in at 88.7. This was the lowest reading since June and the biggest miss relative to expectations since March 2013. As shown in the first chart below, this month's increase also brings the headline reading back below its historical average of 93.3 going back to 1967. Since the recession ended in June 2009, there have only been two months where we have seen above average readings in confidence.
With each month's release of Consumer Confidence, we also like to look to see where confidence stands based on different income levels. As many readers are aware, one of the unique aspects of this recovery has been the fact that the rebound in confidence, which has already been tepid, has also been extremely uneven. The chart below shows Consumer Confidence for US Consumers with incomes of between $35K and $50K and compares it to confidence among consumers with incomes of more than $50K. While higher income consumers normally have a higher level of confidence than lower income ones, the gap between the two has grown uncharacteristically wide during this recovery, and has even hit record highs in recent months.
In this month's report, however, we saw a partial reversal of that trend. Like the overall Consumer Confidence index, confidence among higher income consumers dropped from 118.3 down to 112.3. For lower income consumers, however, we actually saw a modest increase in confidence as that index rose from 84.7 up to 85.9. To be sure, the current gap of 26.4 is still elevated by historical standards, but considering the fact that the gap was wider than 42 percentage points just two months ago is an encouraging sign. However, it needs to be followed by continued improvement if we are going to be able to see a meaningful decline in the six month average (chart below). At a level of 30.30, that reading is still extremely elevated and down less than one percentage point from last month's record high reading.