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Economy in Brief

U.S. Consumer Confidence Unexpectedly Slips
by Tom Moeller  October 29, 2019

The Conference Board's Consumer Confidence Index for October fell 0.3% (-8.7% y/y) to 125.9 after declines in three of the prior four months. A rise to 127.5 had been expected in the Action Economics Forecast Survey. It was the lowest level of confidence since June. September's index level was upwardly revised to 126.3 from 125.1. During the last 20 years, there has been 72% correlation between the level of confidence and the y/y change in real consumer spending.

The decline in confidence reflected a 2.0% weakening (-17.5% y/y) in the expectations component to 94.9, the lowest level since January. The present situations reading improved 1.0% (0.2% y/y) after a 3.1% decline.

A greatly lessened 18.6% of respondents felt that business conditions would improve in the next six months, the least since March. A reduced 16.9% expected that there would be more jobs. An improved 21.0% felt that income would rise, still down from the 24.9% expected three months earlier. An improved 39.2% of respondents felt business conditions were good, remaining below the 42.0% high reached last November. Jobs were viewed as hard to get by 11.8% of respondents, the fewest since November 2000. An improved 46.9% felt that jobs were plentiful.

Expectations for inflation in twelve months were steady m/m at 4.8% and remained below June's high of 5.1%. Forty-four percent of respondents thought that interest rates would rise over the next year versus 73.2% who thought so 12 months ago. Thirty-two percent of respondents felt that stock prices would rise versus 44% last October.

An increased 1.4% of respondents planned to buy a new home and a steady 50.4% planned to buy a major appliance.

Confidence amongst survey respondents over age 55 improved 3.0% (-11.9% y/y) in October. The index level remained down sharply, however, versus its November peak. Confidence amongst respondents aged 35-54 held steady (-11.1% y/y) after two months of sharp decline. Confidence amongst respondents under age 35 fell 7.3% (+4.0% y/y) after a 2.6% decline.

The Consumer Confidence data are 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 Oct Y/Y % 2018 2017 2016
Consumer Confidence Index 125.9 126.3 134.2 -8.7 130.1 120.5 99.8
   Present Situation 172.3 170.6 176.0 0.2 164.8 144.8 120.3
   Expectations 94.9 96.8 106.4 -17.5 107.0 104.3 86.1
Consumer Confidence By Age Group
   Under 35 Years 139.0 150.0 154.0 4.0 133.7 130.2 122.4
   Aged 35-54 Years 127.3 127.3 132.7 -11.1 132.2 123.5 106.2
   Over 55 Years 118.9 115.4 127.1 -11.9 126.3 112.9 84.6
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