The Conference Board's Consumer Confidence Index, which has been declining since the summer, declined even further in November. The Index now stands at 87.3 (1985=100), down from 95.2 in October. The Present Situation Index decreased to 115.4 from 118.0 in October. Moreover, the Expectations Index declined to 68.7 from 80.0, according to the Conference Board.

The director of the Board points to such discouraging trends as volatility in the financial market, the increasing price for gasoline and the likely prospect of higher costs for heating during the winter. This news came on Tuesday; and on Wednesday, the actions that manufacturers have taken became apparent.

New orders for manufactured durable goods last month decreased $0.9 billion or 0.4 percent to US$214.5 billion, the U.S. Census Bureau announced yesterday. Following a 1.4 decrease in September, this was the third consecutive monthly decrease. However, the Bureau noted that these figures come from advance information on orders and shipments. More detailed estimates will come in early December.

Looking at the details:

• Excluding transportation, new orders dropped 0.7 percent, and excluding defense, new orders fell 0.9 percent;

• Shipments of manufactured durable goods in October increased $1.2 billion, or 0.6 percent, to $213.4 billion (In September, shipments of these goods fell by 1.7 percent.);

• Unfilled orders in October rose 1 percent, or $7.6 billion, to $779.3 billion, up 29 of the last 30 months (This figure represents the highest level since the series was first started in 1992 and followed a 1.1 percent increase in September.);

• Inventories climbed 0.2 percent, or $0.8 billion, to $314.3 billion, following a 0.3 percent increase in September; and

• As with unfilled orders, inventories are at the highest level since 1992, perhaps showing unexpectedly weak demand.

The Census Bureau also reported that nondefense new orders for capital goods in October fell 3.1 percent or $2.3 billion to $72.5 billion. In contrast, defense new orders for capital goods in October skyrocketed 16.1 percent or $1.3 billion to $9.3 billion.

However, expectations at the retail level seem less upbeat. Sales for the 2007 holiday shopping season will nudge up just 4 percent to $474.5 billion, according to the National Retail Federation (via NPR.org), projecting the slowest holiday sales growth since 1992. This is also below the decade-old average annual growth of 5 percent."

Because some businesses' profits depend significantly on formation of new households, the rate of new housing units also contributes to the national economic pulse. Sales fell 1.2 percent in October to a 4.97 million annual pace, down from 5.03 million in September, the National Association of Realtors said this week (via The New York Times). Inventories of homes also rose last month, by 1.9 percent.

Adding to the mix of economic news, Board of Governors of the Federal Reserve Systems Vice Chairman Donald L. Kohn explains:

An important issue now is whether concerns about losses on mortgages and some other instruments are inducing much greater restraint and thus constricting the flow of credit to a broad range of borrowers by more than seemed in train a month or two ago... . Should the elevated turbulence persist, it would increase the possibility of further tightening of financial conditions for households and businesses.

Manufacturing "appeared to be largely stable on balance," according to the Federal Reserve's Beige Book. "Demand remained weak or fell further for machinery and manufactured materials related to home construction." Yet demand rose solidly for non-automotive transportation equipment, information technology products and machinery used in the agriculture, energy extraction and mining industries.

Despite the mediocre performance of manufacturing, real gross domestic product (GDP) increased at an annual rate of 3.9 percent in the third quarter of 2007, according to advance estimates released by the U.S. Bureau of Economic Analysis. In the second quarter, real GDP increased 3.8 percent. Motor vehicle output contributed 0.33 percentage point to the third-quarter growth in real GDP after contributing 0.03 percentage point to the second-quarter growth.

As for nationwide employment, the advance figure for seasonally adjusted initial claims in the week ending Nov. 24 was 352,000, an increase of 23,000 from the previous week's revised figure of 329,000, according to the U.S. Department of Labor. "The four-week moving average was 335,250, an increase of 5,750 from the previous week's revised average of 329,500."

Fortunately, the oil producers have a little present for us: "Light, sweet crude for January delivery plunged $3.80 to settle at $90.62 a barrel on the New York Mercantile Exchange following Tuesday's drop of $3.28 a barrel," The Associated Press reports (via the NYT). "The latest price is $8.67, or 8.7 percent, below the record price of $99.29 set last week."

Resources

Consumer Confidence Index
The Conference Board, Nov. 27, 2007

Manufacturers' Shipments, Inventories and Orders (M3)
U.S. Census Bureau, Nov. 28, 2007

Consumers Have Iffy View of Economy
NPR.org, Nov. 27, 2007

Fed Official's Remarks Send Stocks Soaring
by Michael Grynbaum
The New York Times, Nov. 28, 2007

Financial Markets and Central Banking
by Donald L. Kohn
Board of Governors of the Federal Reserve System, Nov. 28, 2007

Beige Book (Summary)
Board of Governors of the Federal Reserve System, Nov. 28, 2007

U.S. Bureau of Economic Analysis: Gross Domestic Product
U.S. Bureau of Economic Analysis, Nov. 29, 2007

Unemployment Insurance Weekly Claims Report
U.S. Department of Labor, Nov. 29, 2007

Oil Drops Sharply on Inventory Report
The Associated Press (via The New York Times), Nov. 28, 2007