Grumpy shoppers still expected to spend more this holiday season

Susannah Lee

American shoppers look to be feeling less jolly as we head into the all-important holiday shopping season.

The Conference Board’s Consumer Confidence Index fell hard in November to 90.4 from 99.1 in October. Economists were expecting a November reading of 99.5.

“I think that there is still a level of caution on the part of consumers. There certainly isn't enough income that can be spent,” said Michelle Girard, senior economist at Royal Bank of Scotland (RBS).

Tuesday’s reading was the lowest level in more than year for the Consumer Confidence Index. "The decline was mainly due to a less favorable view of the job market," said Lynn Franco, director of economic indicators at the conference board.

Americans’ uncertainty in the job market comes after a strong October jobs report. “The employment situation is very healthy,” asserted Girard. “We've got many more people working now than were working a year ago. And income growth is running in inflation adjusted terms.”

But the Conference Board said consumers’ optimism dropped sharply in November regarding their short-term outlook. From the labor market to business conditions, Americans are feeling more pessimistic. The number of consumers expecting their incomes to decrease rose to 11.8 percent from 10.5 percent.

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But Girard thinks consumers should be feeling better about their financial situations. “In the last year or two, we've seen a broadening out of income, even among lower and middle income earners,” she said.

In fact, the economist cites big-ticket purchases showing consumers are feeling more confident than what the latest data suggests. “Two of the strongest sectors right now in terms of the economy are housing and autos. The auto sales rates is at a decade high level, where we're looking at potentially a record selling pace for autos in 2015,” said Girard.

Despite how consumers surveyed say they’re feeling, holiday spending may tell a different story. The National Retail Federation projects sales in November and December excluding autos, gas and restaurants to increase 3.7 percent to $630.5 billion.

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