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Economy in Brief

U.S. Consumer Confidence Deteriorates
by Tom Moeller  September 26, 2017

The Conference Board Consumer Confidence Index eased 0.5% (+15.7% y/y) during September to 119.8 following a 0.3% August rise, revised from 2.4%. The index was 4.1% below its March peak. The Action Economics Forecast Survey looked for stability at 120.0. During the past thirty years, there has been a 70% correlation between the level of consumer confidence and the y/y change in real PCE.

The slight increase in overall confidence reflected a 0.5% gain (17.2% y/y) in the expectations index to 102.2. The present situation index reading fell 1.5% (+14.2% y/y) to 146.1.

The percentage of respondents indicating that business conditions are "good" slipped to 33.8%, still near the highest level since January 2001. The percentage saying business conditions are "bad" roughly matched the recovery low of 13.1%. The 34.4% of respondents saying that jobs are "plentiful" was just below the recent 16-year high. The percentage claiming jobs are "hard to get" declined to a 16-year low of 18.2%. These readings of labor market conditions led to a labor market differential (plentiful minus hard to get) of 14.5 percentage points. This differential is 97% inversely related to the unemployment rate.

The percentage expecting business conditions to improve over the next six months improved slightly to 20.2%, but remained well below its 26.9% March peak. The percentage expecting more jobs in six months rose to a still low 19.5%, well below the 23.8% March peak. The percentage expecting their incomes to strengthen improved slightly to 20.5%, but remained below the March high of 22.5%.

The expected rate of inflation in twelve months rose sharply m/m to 4.9%. The percentage expecting higher interest rates over the next twelve months fell to 64.1%, down from a March high of 72.2%, while 6.9% expected to buy a home.

Confidence amongst individuals between ages 35-to-54 also improved sharply, almost to its March high. Confidence amongst respondents under age 35 fell sharply to the lowest reading in twelve months. Confidence amongst individuals over age 55 fell slightly, but remained near the recent high.

The Consumer Confidence data is available in Haver's CBDB database. The total indexes appear in USECON, and the market expectations are in AS1REPNA

Conference Board (SA, 1985=100) Sep Aug Jul Y/Y % 2016 2015 2014
Consumer Confidence Index 119.8 120.4 120.0 15.7 99.8 98.0 86.9
  Present Situation 146.1 148.4 145.4 14.2 120.6 111.7 87.4
  Expectations 102.2 101.7 103.0 17.2 86.1 88.8 86.6
Consumer Confidence By Age Group
  Under 35 Years 120.9 126.6 130.0 3.9 122.4 116.0 106.6
  Aged 35-54 Years 128.2 122.0 122.2 17.4 106.2 103.9 92.4
  Over 55 Years 112.7 114.5 113.3 20.7 84.6 84.1 73.8
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