Consumers pessimistic about economy — but continue to spend

Marianne Wilson
Marianne Wilson profile picture
A strong job market and lowering inflation are making Americans more confident about the economy.
Consumers continued to spend in October.

Consumer confidence slipped for the third straight month in October. 

 The Conference Board’s Consumer Confidence Index fell to 102.6 in preliminary results for October from an upwardly revised 104.3 in September. The Present Situation Index — based on consumers’ assessement of current conditions — declined to 143.1 from 146.2

The Expectations Index — based on consumers’ short-term outlook for income, business and labor market conditions — fell slightly to 75.6 in October after declining to 76.4 in September.

“The continued skepticism about the future is notable given U.S. consumers — at least through the third quarter of this year — continued to spend heavily on both goods and services,” Dana Peterson, chief economist, The Conference Board.

The decline in consumer confidence was evident across householders aged 35 and up, and was not limited to any one income group, noted Peterson.

“Write-in responses showed that consumers continued to be preoccuped with rising prices in general, and for grocery and gasoline prices in particular,” said Peterson. 

Consumers also expressed about the political situation and higher interest rates, Peterson added. Worries around war/conflicts also rose amid the recent turmoil in the Middle East.

In other findings, more than two-thirds of consumers in October still said a recession is “somewhat”  or “very likely.”

“The fluctuating soundings likely reflect ongoing uncertainty given mixed buying plans,” Peterson said. “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.”

Here are other findings from the October report.

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%.

 The monthly Consumer Confidence Survey, based on an online sample, is conducted for The Conference Board by Toluna. The cutoff date for the preliminary results was October 24.