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Economy in Brief

U.S. Consumer Confidence Is Surprisingly Strong
by Tom Moeller  October 31, 2017

The Conference Board Consumer Confidence Index surged 4.4% during October (24.9% y/y) to 125.9 following a 0.2% September rise, revised from -0.5%. The index was at its highest level since December 2000. The Action Economics Forecast Survey looked for stability this month at 121.0. 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 increase in overall confidence reflected a 5.9% gain (26.9% y/y) in the expectations index to 109.1. The present situation index reading improved 2.9% (22.7% y/y) to 151.1.

The percentage of respondents indicating that business conditions are "good" rose to 34.5%, the highest level since January 2001. The percentage saying business conditions are "bad" held near the recovery low at 13.5%. The 36.3% of respondents saying that jobs are "plentiful" was a 16-year high. The percentage claiming jobs are "hard to get" fell to a 16-year low of 17.5%. These readings of labor market conditions led the labor market differential (plentiful minus hard to get) to a seventeen-year high of 18.8 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 modestly to 22.2%, but remained well below its 26.9% March peak. The percentage expecting more jobs in six months slipped to 14.9%, also below the 23.8% March peak. The percentage expecting their incomes to strengthen held steady at 20.3%, and remained lower than the March high of 22.5%.

The expected rate of inflation in twelve months eased m/m to 4.7%, still up slightly from the August low of 4.5%. The percentage expecting higher interest rates over the next twelve months fell to 63.2%, down from a March high of 72.2%. Six percent expected to buy a home.

Confidence amongst individuals over age 55 rose 37.7% y/y to its highest level since 2000. Confidence amongst those aged 35-54 increased 25.3% y/y, also to a seventeen year high. Confidence amongst individuals under 35 rose a modest 1.6% y/y, and remained below its May peak.

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) Oct Sep Aug Y/Y % 2016 2015 2014
Consumer Confidence Index 125.9 120.6 120.4 24.9 99.8 98.0 86.9
  Present Situation 151.1 146.9 148.4 22.7 120.3 111.7 87.4
  Expectations 109.1 103.0 101.7 26.9 86.1 88.8 86.6
Consumer Confidence By Age Group
  Under 35 Years 126.1 127.5 126.6 1.6 122.4 116.0 106.6
  Aged 35-54 Years 133.9 125.8 122.0 25.3 106.2 103.9 92.4
  Over 55 Years 116.5 113.4 114.5 37.7 84.6 84.1 73.8
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