Consumer Confidence Strengthens in October

The Conference Board's Index of Consumer Confidence rose 9.6% (9.7% y/y) to 108.7 during October following a 6.1% September decline, revised from -6.5%. The level of confidence has moved higher from a low of 97.5 in April. The Action Economics Forecast Survey expected a reading of 99.1 in October. Consumer confidence has been fluctuating between 97.5 and 114.0 over the past two years.

Both components of the index rose sharply this month. The present situation index increased 11.5% (-0.4% y/y) to 138.0 after falling 8.0% in September to 123.8. The expectations index rose 7.6% (22.6% y/y) in October to 89.1 after falling 4.1% in September.

The percentage of respondents assessing business conditions as “good” jumped to 21.4% this month after falling to 18.6% in September. It was the highest percentage in fourteen months. The percentage assessing conditions as “bad” fell to 16.4% from 20.5% in September.

The appraisal of labor market conditions improved in October as 35.1% of respondents thought jobs were plentiful, up from 31.3% in September. The measure had been declining since February. Jobs were viewed as hard to get by 16.8% of respondents this month and reversed the September rise. This measure has risen steadily this year from 11.0% in January. The labor market differential calculated by Haver Analytics (the percentage of consumers who think jobs are plentiful minus the percentage who believe that jobs are currently hard to get) rose m/m to 18.3%, but remained below a high of 47.1% in March 2022. This series has a 60% correlation with the unemployment rate over the last ten years.

Expectations over the next six months improved in October. A higher 21% of respondents expect business conditions to improve over the next six months, up from 19.4% in September, while a lessened 13.2% expect them to worsen, down from 17.1% in September. On employment, 17.8% expect jobs to increase over the next six months versus 17.1% last month, while 17.1% expect the number of jobs to decline versus 18.8% in September. Regarding income, a steady 18.9% expect it to increase, while 12.8% expect it to decrease, fairly steady with 12.9% last month.

Inflation expectations over the next twelve months edged up to 5.3% in October from 5.2% in September. This was higher than a low of 5.0% in August. Interest rates are expected to rise over the year with the percentage expecting an increase rising to 47.5% from 46.1% in September. The percentage of respondents expecting equity prices to increase over the next twelve months jumped to 51.4% from 49.4% in September, while the percentage expecting a decline fell to 23.6% from 25.2%.

The percentage of respondents planning to buy a home held at 5.8%, which was its highest level since August of last year. Plans to purchase an automobile edged up to 13.0% from 11.9% in September.

The Consumer Confidence data are available in Haver’s CBDB database. The total indexes, which are indexed to 1985=100, appear in USECON, and market expectations are in AS1REPNA.