Read our November 20th report: Stock Ownership and Stock Price Expectations

Consumer sentiment was unchanged in late November--a difference of just 0.1 points from mid-month--although there was a significant decline in the Expectations component which was offset by more favorable assessments of current economic conditions. Importantly, the November data were less optimistic than last month due to the resurgence in covid infections and deaths as well as partisan shifts due to the outcome of the presidential election. For the first time since Trump entered office, Democrats rather than Republicans held a more optimistic economic outlook (see the chart). The steep rise in covid infections had a greater impact on Democrats as 59% of Democrats reported that the coronavirus had changed their lives to a great extent compared with just 36% among Republicans. In the months ahead, if infections and deaths rise as anticipated, further declines in optimism are likely. The anticipated declines, however, will be tempered by the approval of several vaccines by the end of the year. The approval of vaccines will heighten concerns about vaccination priorities, especially when accompanied by the expected increase in deaths in the next several months. These events are likely to promote more closures and stay-at-home orders in addition to mandatory masks and social distancing. Widespread closures would incur a heavy toll on the entire economy and cause escalating hardships among some households. A delay in federal aid until next year would allow great harm and permanent damage to occur to many firms, local governments, and households.