Consumer Confidence Recovers In October, Reversing A Three-Month Trend
After slipping over the past three months, consumer sentiment ticked upwards in October as concerns over the Delta variant eased. The Conference Board’s Consumer Confidence Index rose to 113.8 in October, up from 109.8 in September.
The Conference Board’s Present Situation Index—based on consumers’ assessment of current business and labor market conditions—rose to 147.4 from 144.3 last month. The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—improved to 91.3 from 86.7.
“Consumer confidence improved in October, reversing a three-month downward trend as concerns about the spread of the Delta variant eased,” says Lynn Franco, senior director of economic indicators at The Conference Board. “While short-term inflation concerns rose to a 13-year high, the impact on confidence was muted. The proportion of consumers planning to purchase homes, automobiles and major appliances all increased in October—a sign that consumer spending will continue to support economic growth through the final months of 2021. Likewise, nearly half of respondents (47.6 percent) said they intend to take a vacation within the next six months—the highest level since February 2020, a reflection of the ongoing resurgence in consumers’ willingness to travel and spend on in-person services.”
Looking closer at the present situation, consumers’ appraisal of current business conditions was mixed in October. The Conference Board’s survey found that 18.6 percent of consumers said business conditions are “good,” down from 19.1 percent, yet the share of consumers saying business conditions were “bad,” 24.9 percent, was down from 25.3 percent last month.
Consumers’ assessment of the labor market was moderately more favorable, as 55.6 percent of consumers said jobs are “plentiful,” down from 56.5 percent, but conversely, 10.6 percent of consumers said jobs are “hard to get,” down from 13 percent.
Looking ahead six months, consumers’ optimism about the short-term business conditions outlook was mixed. In October, 24.3 percent of consumers expect business conditions will improve, up from 21.7 percent last month. On the other hand, 21.1 percent expect business conditions to worsen, up from 17.6 percent.
Consumers were more optimistic about the short-term labor market outlook. The survey found that in October, 25.4 percent of consumers expect more jobs to be available in the months ahead, up from 21.3 percent in September. And now 18.3 percent anticipate fewer jobs, down from 19.9 percent one month ago. Consumers were also more positive about their short-term financial prospects. In October, 18.7 percent of consumers reported that they expect their incomes to increase, up from 16.9 percent in September, while 11.3 percent expect their incomes will decrease, virtually unchanged from 11.4 percent last month.