Following a glum monthly report in August and a similar one in September, nonprofit research firm The Conference Board’s Consumer Confidence Index, which measures American opinions of current economic conditions and their outlook for the next six months, finally had some good news.
The Index rose by 7.5 points to 91.7 in October, up from 84.2 in September. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, increased by 8.6 points to 120.4. The Expectations Index, based on consumers’ short-term outlook for income, business and labor market conditions, recovered by 6.9 points to 72.6, only partially reversing three consecutive monthly declines. The survey period for this month’s preliminary results was Oct. 1-21.
“Consumer confidence advanced in October, driven primarily by improved perceptions of current and expected business conditions,” said Fergus McCormick, senior economist, Global Indicators at The Conference Board. “The recovery was in line with retail gasoline prices easing from September to October.
“Yet, despite the increase in October, consumer confidence remained on the long-term downward trend that’s persisted over the past few years. Consumers planned less spending on services and durable goods over the next six months. This likely reflected higher price levels and persistent inflation, which eroded consumers’ purchasing power.”
Worries about the broader macro situation have weighed on housing, though most economists have cited rapidly increasing mortgage rates as a larger factor pushing sales toward historic lows. Consumer attitudes toward the economy are still being watched closely by many real estate practitioners, gauging how much buyer demand is on the sideline waiting for rates to improve.
McCormick added that among write-in responses in October, consumers continued to express frustration with rising costs, with references to the high cost of food and groceries and oil and diesel prices increasing.
“Comments about war and conflict eased for a second straight month but remained elevated,” he concluded. “Mentions of jobs and employment as an area of concern also ticked up, though to a lesser extent.”
With mortgage rates barely below a recent two-year high, consumers are also likely still not at ease with the economy, with the Federal Reserve having raised interest rates for the first time in over a year and may do so again Oct. 28 to combat rising inflation.
The new good news in the U.S. is even more impressive when compared to recent consumer confidence numbers in France, which is at its lowest level since 2013, and with the results in Finland and Italy not a whole lot better.
