Consumer Confidence Rebounds Ahead of US Election

US (if it’s US) consumer confidence has recorded its strongest monthly gain since March 2021 according the Conference Board Consumer Confidence Index.

The index is made up of several components including the Consumer Confidence Index, Present Situation Index and Expectations Index.

In October, the Consumer Confidence Index increased to 108.7, up from 99.2 in September.

The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — increased by 14.2 points to 138.0.

The Expectations Index — based on consumers’ short-term outlook for income, business and labor market conditions — increased by 6.3 points to 89.1, well above the threshold of 80, with results below this typically signaling a recession may be ahead.

The index revealed that consumers’ assessments of current business conditions has become more positive. “Consumer confidence recorded the strongest monthly gain since March 2021, but still did not break free of the narrow range that has prevailed over the past two years,” said Dana M Peterson, Chief Economist at The Conference Board.

Views on the current availability of jobs rebounded after several months of weakness, potentially reflecting better labor market data.

Compared to last month, consumers were substantially more optimistic about future business conditions and remained positive about future income. Also, for the first time since July 2023, they showed some cautious optimism about future job availability.

More than half (51.4%) of consumers also expected stock prices to increase over the year ahead, the highest reading since the question was first asked in 1987, only 23.6% expected stock prices to decline.

The share of consumers expecting higher interest rates over the next 12 months increased to 47.5% after declining for four months in a row.

The share expecting lower rates decreased to 30.3%. Write-in responses showed consumers welcomed the recent reduction in interest rates but felt that levels were still too high.

Meanwhile, despite further slowing in overall inflation and declines in gas prices, average 12-month inflation expectations rose to 5.3% in October from 5.2% last month. This may reflect continued upward pressures on food and services prices.

Still, inflation expectations were well below the peak of 7.9% in March 2022.

The monthly Consumer Confidence Survey, based on an online sample, is conducted for The Conference Board by Toluna.