A Walmart store in Salt Lake City, Utah, in September 2016. Photo: 小田原 (Odawara) via Wikimedia Commons, CC BY-SA 4.0. Resized.
U.S. consumer confidence rebounded in October as households felt better about business conditions and jobs, but plans to buy big-ticket goods and spend on services weakened, showing that an improved mood has not erased pressure on family budgets.
The Conference Board’s Consumer Confidence Index rose 7.5 points to 91.7, from a revised 84.2 in September, the organization said in its Tuesday release. The survey’s preliminary October results cover responses collected October 1-21.
The Present Situation Index, which measures views of current business and labor-market conditions, increased 8.6 points to 120.4. The Expectations Index, covering the six-month outlook for income, business and jobs, rose 6.9 points to 72.6, only partly reversing three consecutive monthly declines.
Better confidence, more cautious spending
The split matters for retailers, travel companies and other businesses counting on household demand. Consumers can feel less worried about the economy while still deciding to delay purchases or limit what they spend.
The Conference Board said plans to purchase cars and homes slipped slightly on a six-month moving-average basis. Planned durable-goods spending fell across the categories it tracked, with expected purchases of smartphones, computers, laptops and tablets pulling back by more than 1%.
Expected spending on services over the next six months was generally lower, apart from movies, theater, live entertainment and sporting events. Plans for hotels and airfare moderated. The share planning a vacation fell to 43.3%, from an upwardly revised 44.2% in September.
These are intentions reported in a survey, not a measurement of money already spent. They nevertheless show why the headline confidence gain alone does not establish that consumers are ready to accelerate purchases.
Jobs look a little easier to find
The share of respondents saying jobs were plentiful rose to 26.7%, from 24.3%. The share saying jobs were hard to get was unchanged at 21.4%, widening the gap between the two to 5.3 percentage points.
The employment outlook was still more negative than positive. Some 26.3% expected fewer jobs over the next six months, compared with 15.2% expecting more. That gap narrowed from September, but a less pessimistic reading is different from widespread optimism.
Income expectations improved as well: 18.7% expected their incomes to increase and 12% expected a decline, compared with 18.1% and 14.9% in September.
Price pressure remains in the picture
Consumers’ average expectation for inflation over the next year declined to 5.8%, according to the survey. That is what respondents expect, not the government’s measured inflation rate or a forecast guaranteed to occur.
Fergus McCormick, the Conference Board’s senior economist for global indicators, said the confidence recovery was consistent with easing retail gasoline prices between September and October. Even so, respondents continued to express frustration with high prices, including food and groceries, and references to oil and diesel prices increased.
The organization said confidence remained on a longer-term downward trend despite October’s recovery. On a six-month moving-average basis, only consumers younger than 35 and those in households earning at least $100,000 showed an increase in confidence.
The survey is conducted online for the Conference Board by Toluna. The preliminary figures can be revised. Its next consumer-confidence release is scheduled for November 24 at 10 a.m. Eastern Time.
JBizNews Desk | New York
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