Consumer confidence slid again after two months of monthly gains, falling below expectations as the index measuring short-term expectations of economic growth remains “dismal.”
The index, run by nonprofit think tank The Conference Board, fell to 102.5 this month, from 107.8 in September as consumers continued to worry about inflation, interest rates and worldwide economic instability.
Notably, the portion of the index measuring current sentiment fell much more sharply, from 150.2 down to 138.9, while the portion measuring short-term outlooking fell marginally from 79.5 to 78.1.
“Consumers’ expectations regarding the short-term outlook remained dismal,” said Lynn Franco, senior director of economic indicators at The Conference Board, in a statement. “The Expectations Index is still lingering below a reading of 80—a level associated with recession—suggesting recession risks appear to be rising.”
Despite this overall drop, a granular look at the survey showed a more complicated picture, as people remain optimistic about certain types of spending, and other measures revealed mixed or conflicted sentiment. Intentions to purchase homes, cars and appliances all rose, in fact, despite significant worries about inflation both now and in the future.
“Notably, concerns about inflation—which had been receding since July—picked up again, with both gas and food prices serving as main drivers. Vacation intentions cooled,” said Franco. “Looking ahead, inflationary pressures will continue to pose strong headwinds to consumer confidence and spending, which could result in a challenging holiday season for retailers.”
This reflects the broader evolution of the “weird” post-pandemic economy, driven by loose monetary policy and the after effects of supply chain disruptions, along with significant government spending. The labor market has remained strong despite large interest rate hikes, and wages grew at a historic pace for most people—though not enough to keep up with inflation.
According to The Conference Board survey, though, consumers are not sure what to expect going forward. There is a sense that the current labor market is more difficult than it was last month, with 45.2% of consumers saying jobs were “plentiful,” down from 49.2%. And 12.7% of consumers said jobs were “hard to get” in October, up from 11.1%.
Other signals were mixed. Almost one in 10 (9.8%) of consumers expect more jobs to be available in the short term (the next six months), up from 17.4%. However, 20.8% of people anticipate fewer jobs, up from 17.8%, meaning consumers are seeing some change—either positive or negative.
The same conflicted feelings held true for short-term business conditions and financial prospects, as more people expected either worse or better conditions in the near future, rather than conditions staying the same. And while 18.9% of consumers expect their incomes to increase, up from 18.3%, 15.1% expect their incomes to decrease, up from 13.8%. Further, almost one-fifth (19.2%) of consumers expect business conditions to improve, up from 18.6%, while 23.3% expect business conditions to worsen, up from 21.9%.
