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Economy in Brief

U.S. Consumer Confidence Deteriorates
by Tom Moeller  October 25, 2016

The Conference Board reported that its Consumer Confidence index for October declined 4.7% (-0.5% y/y) to 98.6, the first decline in three months. A 2.6% rise had been expected in the Action Economics Forecast Survey. During the last ten years there has been a 70.0% correlation between the level of confidence and the y/y change in real PCE.

The index of confidence about the present situation fell 5.7% (+5.2% y/y), the first decline in five months. The future confidence index was off 3.8% (-5.4% y/y), down for the first time in three months.

A sharply reduced 26.2% of respondents felt that business conditions were good, the lowest level since May. A lessened 24.3% of individuals thought that jobs were plentiful, the fewest in three months. Just 22.1% thought jobs were hard to get, nearly the least of the expansion.

The outlook for future business conditions deteriorated, and the percentage who thought that there would be more jobs backpedaled to the lowest level (13.1%) since May. Expectations for the inflation rate eased to 4.8%, and reversed the prior month's rise, while an increased 61.6% thought that interest rates would rise. Plans to buy a new home improved slightly to 0.8% following sharp deterioration in September. Total plans to buy a major appliance plummeted to 46.3%, the lowest since January of last year.

By age group, confidence amongst individuals under 35 years old improved 2.3% (3.6% y/y), but remained well below the June high. This was offset by a 9.5% decline (+2.7% y/y) in confidence amongst individuals aged 55 and over. Confidence amongst those aged 35-54 fell 5.6% (-6.4% y/y) to the lowest level since May.

The Consumer Confidence data is available in Haver's CBDB database. The total indexes appear in USECON, and the market expectations are in AS1REPNA

Conference Board (SA, 1985=100) Oct Sep Aug Y/Y % 2015 2014 2013
Consumer Confidence Index 98.6 103.5 101.8 -0.5 98.0 86.9 73.2
  Present Situation 120.6 127.9 125.3 5.2 111.7 87.4 67.6
  Expectations 83.9 87.2 86.1 -5.4 88.8 86.6 77.0
Consumer Confidence By Age Group
  Under 35 Years 119.1 116.4 122.5 3.6 116.0 106.6 93.1
  Aged 35-54 Years 103.1 109.2 113.0 -6.4 103.9 92.4 76.8
  Over 55 Years 84.5 93.4 84.5 2.7 84.1 73.8 61.2
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