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Economy in Brief

U.S. Consumer Confidence Strengthens to 18-Year High
by Tom Moeller  October 30, 2018

Consumer confidence during October improved to the highest level since September 2000. The Conference Board Consumer Confidence Index increased 1.9% (9.3% y/y) to 137.9 from 135.3 in September, initially reported as 138.4. The October level exceeded expectations for 136.0 in the Action Economics Forecast Survey. The indexes in the report are based on 1985=100. During the past 10 years, there has been a 68% correlation between the level of consumer confidence and the y/y change in real PCE.

The present situations component improved 2.0% (13.7% y/y) to 172.8. The expectations component increased 1.9% (5.1% y/y) to 114.6. Both figures were at the highest levels since 2000.

Business conditions were viewed as "good" by a steady 40.5% of respondents and viewed as "bad" by just 9.2%. Jobs were viewed as "plentiful" by an increased 45.9% of respondents. Jobs were viewed as "hard to get" by a lessened 13.2%, the fewest since March 2001. The net jobs assessment reading, the difference between plentiful and hard to get, increased to 32.7, a 17-year high. The differential has a 95% correlation with the unemployment rate.

Expectations for business conditions rose m/m as an improved 26.3% of respondents thought that conditions would improve. Income was expected to increase in six months by a higher 24.7% of respondents, up from 20.3% one year earlier. Expectations that there would be more jobs in six months were fairly steady at 21.9% of respondents, up from the recent low of 12.2% in February 2016.

The expected inflation rate in twelve months ticked higher m/m to 4.8%, but remained down from the 5.0% July high. The percentage expecting higher interest rates over the next twelve months rose to 72.8%, nearly the highest of the recent cycle. Those looking to buy a home in the next six months improved m/m to 6.4% from last month's figure which was lowered.

Confidence amongst respondents under age 35-years-old eased from its 18-year high reached in September. For those aged 35-54, confidence increased to another 18-year high, and for those over 55 years of age, confidence similarly strengthened.

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 % 2017 2016 2015
Consumer Confidence Index 137.9 135.3 134.7 9.3 120.5 99.8 98.0
  Present Situation 172.8 169.4 172.8 13.7 144.8 120.3 111.7
  Expectations 114.6 112.5 109.3 5.1 104.3 86.1 88.8
Consumer Confidence By Age Group
  Under 35 Years 134.2 140.7 135.8 5.5 130.2 122.4 116.0
  Aged 35-54 Years 143.7 135.5 137.3 6.2 123.5 106.2 103.9
  Over 55 Years 134.4 131.2 132.0 15.8 112.9 84.6 84.1
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