Consumers Remain Pessimistic About the Future Even as They Continued to Spend – The Conference Board Consumer Confidence Index declined moderately in October to 102.6 (1985=100), down from an upwardly revised 104.3 in September. The Present Situation Index based on consumers’ assessment of current business and labor market conditions declined to 143.1 (1985=100) from 146.2. The Expectations Index based on consumers’ short-term outlook for income, business, and labor market conditions fell slightly to 75.6 (1985=100) in October, after declining to 76.4 in September. The Expectations index is still below 80 the level that historically signals a recession within the next year. Consumer fears of an impending recession remain elevated, consistent with the short and shallow economic contraction we anticipate for the first half of 2024. “Consumer confidence fell again in October 2023, marking three consecutive months of decline,” said Dana Peterson, Chief Economist at The Conference Board. “October’s retreat reflected pullbacks in both the Present Situation and Expectations Index. Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for grocery and gasoline prices in particular. Consumers also expressed concerns about the political situation and higher interest rates. Worries around war/conflicts also rose, amid the recent turmoil in the Middle East. The decline in consumer confidence was evident across householders aged 35 and up, and not limited to any one income group.” Peterson added: “Assessments of the present situation were driven by less optimistic views on the state of business conditions, but consumers’ rating of current job availability held steady. Fewer consumers said that business conditions were good, and more said they were bad. Regarding the employment situation, slightly fewer consumers said that jobs were ‘plentiful’ compared to September, but the number saying jobs were ‘hard to get’ also declined. However, when asked to assess their current family financial conditions (a measure not included in calculating the Present Situation Index), those responding ‘good’ rose, and those citing ‘bad’ were little changed. This suggests consumer finances remain buoyant in the face of elevated inflation.” “Expectations for the next six months stayed below the recession threshold of 80, reflecting a decline in confidence about future business conditions, job availability, and incomes. The continued skepticism about the future is notable given US consumers at least through the third quarter of this year continued to spend heavily on both goods and services. Expectations that interest rates will rise in the year ahead ticked up in October, and the outlook for stock prices weakened slightly. Furthermore, average 12-month inflation expectations increased in October to 5.9 percent, after holding steady at 5.7 percent for the past three months. The measure of expected family financial situation, six months hence (not included in calculating the Expectations Index) continued to fall.” “More than two-thirds of consumers still said recession is ‘somewhat’ or ‘very likely’ in October. The fluctuating soundings likely reflect ongoing uncertainty given mixed buying plans. On a six-month moving average basis, plans to purchase autos and appliances rose while plans to buy homes in line with rising interest rates continued to trend downward.” Present Situation – Consumers’ assessment of current business conditions was more pessimistic in October. 19.1% of consumers said business conditions were “good,” down from 21.0% in September. 18.3% said business conditions were “bad,” up from 15.9%. Consumers’ appraisal of the labor market held steady in October. 39.4% of consumers said jobs were “plentiful,” down slightly from 39.7% in September. However, 13.1% of consumers said jobs were “hard to get,” down from 14.2%. Expectations Six Months Hence – Consumers were, on balance, more pessimistic about the short-term business conditions outlook in October. 16.5% of consumers expect business conditions to improve, up from 15.3% in September. However, 20.2% expect business conditions to worsen, up from 18.7%. Consumers’ assessment of the short-term labor market outlook wasslightly less favorable in October. 16.0% of consumers expect more jobs to be available, down from 16.2% in September. 19.0% anticipate fewer jobs, up slightly from 18.9%. Consumers’ assessment of their short-term income prospects slipped in October. 15.6% of consumers expect their incomes to increase, down from 17.9% in September. 13.0% expect their incomes to decrease, down from 14.1%.
Conference Board – Consumer Confidence Index (10-31-23)
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