Consumer confidence rises in October

Consumer confidence increased in October after three consecutive monthly declines.

The Conference Board’s Consumer Confidence Index rose to 113.8 in October, up from 109.8 in September. Economists polled by The Wall Street Journal had forecast a decline to 108.

The 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,” said 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, Franco added. “Likewise, nearly half of respondents (47.6%) 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,” he said.

Consumers’ assessment of the labor market was moderately more favorable in October. Over half (55.6%) said jobs are “plentiful,” down from 56.5%.  Conversely, 10.6% of consumers said jobs are “hard to get,” down from 13.0% in September.

Consumers’ appraisal of current business conditions was mixed in October, with18.6% of consumers saying business conditions are “good,” down from 19.1%. However, 24.9% of consumers said business conditions are “bad,” down from 25.3%.

Other findings from the October report are below:

• Consumers’ optimism about the short-term business conditions outlook was mixed in October… 24.3% of consumers expect business conditions will improve, up from 21.7% in September. But 21.1% expect business conditions to worsen, up from 17.6%.

• Consumers were more optimistic about the short-term labor market outlook: 25.4% of consumers expect more jobs to be available in the months ahead, up from 21.3%. And 18.3% anticipate fewer jobs, down from 19.9%.

• Consumers were more positive about their short-term financial prospects: 18.7% expect their incomes to increase, up from 16.9%. And11.3% expect their incomes will decrease, virtually unchanged from 11.4%.