Consumer Confidence Up

The Conference Board’s Index of Consumer Confidence in October rose and recovered most of the prior month's moderate decline. The index rose 5.3% from September to 81.1. That was versus Consensus estimates for a reading of 79.0.

The expectations index rose to 90.7 (11.8% y/y) from a revised 88.5 in September. The reading of the present situation rose to 66.8 (-13.5% y/y) from 59.7.

The rise in Confidence was somewhat greater than the 1.9% October gain in Consumer Sentiment reported by the University of Michigan.

Jobs were viewed as hard to get by 33.8% of respondents, down slightly from 35.1% in September but up from 27.3% last October. Expectations about job opportunities in six months improved.

The Conference Board’s survey is conducted by a mailed questionnaire to 5,000 households and about 3,500 typically respond.

Durable goods orders rose 0.8% in September. The previously reported 0.9% decline in August was revised to a decline of just 0.1%. Consensus expectations had been for a 1.2% gain in September.

Excluding the volatile transportation sector, durable orders rose 1.2% (5.6% y/y) following a 0.7% gain in August, revised from a 0.3% decline reported initially.

Orders for the transportation sector as a whole dropped 2.2% as orders for both motor vehicles and aircraft fell.

Capital goods orders were quite strong, rising 3.4%. Excluding aircraft and parts, nondefense capital goods orders surged 3.9% (13.5%) and a 0.8% decline in August was lessened to -0.1%.

Orders for computers & electronic products jumped another 2.6% (18.4% y/y) and orders in August were revised up substantially. Orders for computers & related products fell 0.4% (9.2% y/y) but orders for communication equipment were strong. Electrical equipment orders firmed notably in three of the last four months.

Shipments of durable goods jumped 2.5%, led higher by aircraft shipments. Excluding transportation shipments rose 1.2% (2.5% y/y).

Durable inventories fell 0.7% last month (-3.7% y/y) and decumulation reported for earlier months was deepened.

The Federal Reserve left the target rate for federal funds unchanged at 1.00%. The discount rate also was left unchanged at 2.00%.

The unanimous action was as expected by economists.

The press release which accompanied the Fed’s action contained the following statement. "The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period confirms that spending is firming, and the labor market appears to be stabilizing. Business pricing power and increases in core consumer prices remain muted."

The above reference to a stabilizing labor market is a change from the last FOMC statement which characterized the labor market as "weakening."

The press release also indicated that "The Committee judges that, on balance, the risk of inflation becoming undesirably low remains the predominant concern for the foreseeable future. In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period."

The complete text of the Fed's latest press release can be found here .

"Monetary Policy and Learning: Some Implications for Policy & Research" from the Federal Reserve Bank of Atlanta is available here .