William Katz:  Urgent Agenda

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ECONOMIC STRESS:  It isn't affecting everyone equally, but no one will call this an economic boom, or even a recovery.  From CBS News:

American consumers are entering the holiday season feeling gloomier about the economy amid ongoing high inflation and layoffs in the tech sector, depressing U.S. consumer confidence for the second straight month in November. 

The Conference Board reported Tuesday that its consumer confidence index fell to 100.2 this month, down from 102.2 in October. November's figure is the lowest since July, and likely reflected an uptick in gas prices earlier this fall, said Lynn Franco, senior director of economic indicators at the Conference Board. 

Gas prices have since reversed and fell to $3.52 a gallon, on average, nationwide on Tuesday, according to AAA. That's down from $3.76 a month ago.

The data indicates Americans are taking a more gloomy view about the economy. Before the pandemic, the index regularly topped 120. With the cost of food, rent, clothing, and other essentials surging, inflation is near the worst in four decades, increasing 7.7% in October from a year earlier.

"Consumers' increased pessimism is consistent with our view that consumer spending and the broader economy are downshifting to a much slower growth path amid high inflation, rapidly rising interest rates and financial market volatility," noted Oxford Economics U.S. economist Gurleen Chadha in a Tuesday research note. 

Despite the negative outlook, however, most Americans — particularly those with higher incomes — are still spending, fueling a generally healthy start to the winter holiday shopping season last weekend.

The latest readings show a "tale of two incomes," according to Jeffrey Roach, Chief Economist for LPL Financial, in an email. 

"Inflation acutely impacts lower income households while upper income households feel less of the pain. Consumer confidence rose in November for those making $50,000 or more," he noted. 

The business research group's present situation index — which measures consumers' assessment of current business and labor market conditions — dropped slightly to 137.4 from 138.7 in October.

COMMENT:  Whether we like it of not, the 2024 presidential campaigns will start soon, and the economy will be the key.  But Republicans must approach the subject with care.  It will not be enough to point to Biden's failures.  Republicans must tell voters what they will do, economically, if elected.  That element of a "program" or a "contract with America" was largely missing this past fall.

November 29, 2022