U.S. Consumer Confidence Falls in October
by:Tom Moeller
|in:Economy in Brief
Summary
- Present situation assessment falls to 18-month low.
- Overall expectations reading weakens.
- Inflation expectations edge higher.
The Conference Board's Index of Consumer Confidence Index fell 4.9% during October (-8.2% y/y) to 102.5 following a 4.1% September rise to 107.8, revised from 108.0. The index was 20.5% below its most recent high of 128.9 in June 2021. A reading of 105.0 had been expected in the Action Economics Forecast Survey for October.
Consumers' views of both the current & future economic situation deteriorated this month. The Present Situation Index fell 7.5% (-4.5% y/y) to 138.9 and reversed two consecutive months of increase. The index settled at the lowest level since April of 2021. The Expectations Index weakened 1.8% (-12.2% y/y) to 78.1 this month, after rising 5.9% in September and 15.5% in August. It remained 30.1% below its recent peak in March 2021.
Consumers' assessment of current business conditions deteriorated as only 17.5% of respondents characterized them as good, the weakest reading in three months. Labor market readings showed less optimism this month. The jobs gap, representing the difference between respondents indicating that jobs are plentiful and those saying jobs are hard to get, fell to 32.5% in October, the lowest level in 18 months. Calculated by Haver Analytics, this series has a 67% correlation with the unemployment rate over the last ten years. The jobs plentiful measure fell sharply this month, also to an 18-month low. The jobs hard-to-get measure rose similarly.
A higher 19.2% of respondents felt that business conditions would get better in six months, up from a July low of 13.7%. An improved 19.8% of respondents felt there would be more jobs in six months, up from 15.1% in July. A higher 18.9% expected income to increase in six months, up from a 15.3% July low.
Inflation expectations turned up. The expected inflation rate in twelve months edged up to 7.0% in October after falling to 6.8% in September. It remained below the June high of 7.9%. The figure is higher than the 4.4% low in January 2020. A lessened 64.9% of respondents expected interest rates to rise over the next twelve months.
The share of respondents planning to buy a home within six months increased to 6.8% in October, up from a 4.5% July low. It stood at the highest level in six months and occurred even as mortgage rates rose. Those planning to buy a major appliance jumped to 49.5% of respondents in October, up from a 41.1% July low.
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.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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