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Economy in Brief

U.S. Consumer Confidence Rebounds Meaningfully in September
by Tom Moeller  September 29, 2020

• Improves to highest level in six months.

• Appraisal of both current conditions and expectations firm.

• Confidence rises in all age brackets.

The Conference Board's monthly consumer confidence survey showed improvement this month following two months of decline. The September index was 101.8 (1985=100), an 18.0% increase from August which was raised to 86.3 from 84.8. Expectations had been for a lesser increase to 90.1 in the Action Economics Forecast Survey. Over the last 25 years, there has been a 58% correlation between the level of confidence and the y/y change in real consumer spending.

The index of expected conditions in six months rose 20.1% (7.4% y/y) in September as it mostly recouped declines during the prior two months. An increased 37.1% respondents expected improvement in business conditions in the next six months while a higher 33.1% expected a rise in employment. The percentages looking for deterioration declined. Income was expected to improve by a raised 17.5% of respondents, while a lessened 12.6% expected a decline.

The index of the present situation increased 14.8% in September to the highest level since March. The increase reflected an improved 18.3% of respondents who felt that business conditions were good and a greatly lessened 37.4% who felt they were bad. The labor market was perceived as slightly better with the "labor market differential" (jobs plentiful minus jobs hard-to-get) improving slightly.

Expectations for the inflation rate in twelve months eased in September to 5.7%, and that was down from a 6.6% high in June. An increased 42.5% felt that interest rates would increase during the next six months while a lessened 21.3% felt they would decline. Plans to buy a house, new or existing, increased in September to 6.4% of respondents, although this was down from 7.7% in July. A slightly higher 11.8% of respondents planned to buy a car and an increased 49.0% planned to buy a major appliance within six months, the most since February.

By age group, the index of confidence among those under 35 improved m/m for the first time in three months (-38.8% y/y. Confidence of those aged 36-54 surged to the highest level in six months (-22.0% y/y). And those over age 55, confidence also rose to the highest level in six months (-8.1 y/y).

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

Conference Board (SA, % Chg.) Sep Aug Jul Sep Y/Y 2019 2018 2017
Consumer Confidence Index 18.0 -5.9 -6.7 -19.4 -1.4 8.0 20.7
   Present Situation 14.8 -10.5 10.6 -42.3 3.1 13.8 20.3
   Expectations 20.1 -2.6 -16.2 7.4 -6.0 2.6 21.1
Consumer Confidence By Age Group
   Under 35 Years 4.7 -9.4 -16.0 -38.8 0.3 2.7 6.4
   Aged 35-54 Years 19.2 -5.7 -6.5 -22.0 -1.1 7.0 16.4
   Over 55 Years 21.7 -5.4 -3.7 -8.1 -1.9 11.8 33
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