- The Conference Board’s consumer confidence index rose 7.5 points to 91.7 in October, from about 84.2 in September (Lumida calculation), the first increase in four months and the highest reading since June. The figure topped every forecast in a Bloomberg survey of economists.
- The expectations index for the next six months rose nearly 7 points to 72.6, while the present conditions gauge hit its highest level since April. The share of Americans who see jobs as plentiful rose to a six-month high, and the labor market differential improved.
- Conference Board economist Fergus McCormick tied the rebound to retail gasoline prices easing from September to October, but said confidence remains on a long-term downward trend. Consumers are still troubled by high prices, wages lagging inflation and rising borrowing costs for homes and cars.
- The data arrive a week before the midterm elections, with affordability a defining issue for voters. Sentiment has been a poor guide to spending, which remains resilient, and the University of Michigan sentiment index fell to a five-month low last week.
What Happened?
US consumer confidence rose unexpectedly in October on brighter views of the job market and business conditions, the Conference Board said Tuesday. Its index rose 7.5 points to 91.7, with more Americans describing business conditions as good rather than bad. Plans to buy big-ticket items were mixed, and vacation intentions edged lower. Sentiment improved across all political groups, particularly Republicans, and the survey ran Oct. 1 to 21.
Why It Matters?
Stronger confidence about jobs supports the case that consumer spending can keep underpinning growth even as rates rise. “The labor market remains supportive of spending activity,” Nationwide’s Ben Ayers said. For the Fed, a rebound in confidence alongside high inflation strengthens the argument for keeping policy tight. But the gap with the weaker Michigan survey shows households still feel squeezed by the cost of living.
What’s Next?
Watch whether lower gasoline prices keep supporting confidence into November or reverse with energy markets. The midterm results and the Fed decision this week could shift households’ views on borrowing costs. Spending data will show whether the confidence gain translates into purchases heading into the holidays.
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Source: Bloomberg
