Consumer Confidence Is Down Yet Shoppers Continue to Spend

New York—U.S. consumer confidence fell in October, marking the third consecutive month of decline as fears of a recession persisted, though shoppers continued to spend.

The Conference Board’s consumer confidence index decreased to 102.6 in October from an upwardly revised 104.3 in September.  

“Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for grocery and gasoline prices in particular,” said Dana Peterson, chief economist at The Conference Board.

Consumers also shared concerns about politics and higher interest rates as well as ongoing conflicts, including the Israel-Hamas War.

“The decline in consumer confidence was evident across household [members] aged 35 and up, and not limited to any one income group,” said Peterson.
  
The Present Situation Index, which measures consumers’ current view of business and labor market conditions, declined to 143.1 from 146.2 in September. 

“Assessments of the present situation were driven by less optimistic views on the state of business conditions, but consumers’ rating of current job availability held steady,” said Peterson.
 
Consumers’ view of current business conditions was more pessimistic in October, with the percentage of respondents who said current business conditions are “good” down to 19 percent from 21 percent in September, while those who said conditions are “bad” increased to 18 percent from 16 percent. 

Consumers had a mixed view of the current labor market.  
 
The percentage of respondents who felt jobs were plentiful was virtually flat at about 40 percent in October, while 13 percent said jobs were “hard to get,” down from 14 percent in September. 

 
The Expectations Index, which measures consumers’ outlook for income, business, and labor market conditions in the near future, fell slightly to 75.6 from 76.4 in September. 
 
When expectations fall below 80, that historically signals a recession within the next year, said the Conference Board, a prediction it first made in July. 

“Consumer fears of an impending recession remain elevated, consistent with the short and shallow economic contraction we anticipate for the first half of 2024,” said the Conference Board.

Peterson noted that two-thirds of consumers said a recession is “somewhat” or “very likely” in October.

“The fluctuating soundings likely reflect ongoing uncertainty given mixed buying plans. On a six-month moving average basis, plans to purchase autos and appliances rose while plans to buy homes—in line with rising interest rates—continued to trend downward,” she said.

“The continued skepticism about the future is notable given U.S. consumers, at least through the third quarter of this year, continued to spend heavily on both goods and services,” she noted.

Looking at short-term business conditions, respondents’ outlooks were more pessimistic, for the most part.

Seventeen percent of respondents expected business conditions to improve, up from 15 percent in September, but 20 percent expected them to worsen, up from 19 percent.

Consumers’ assessment of the short-term labor market outlook in October was about the same as it was in September.

The percentage of respondents who expect more jobs to be available was nearly flat at 16 percent while 19 percent expect fewer jobs to be available, also flat month-over-month.
 
Consumers’ short-term income expectations were down while prospects were up slightly.

Fewer respondents expect to see their incomes increase (16 percent in October versus 18 percent in September) while 13 percent expect their incomes to decrease, down from 14 percent.  

The Conference Board recently added a new set of questions to its monthly survey, asking consumers how they felt about their family finances.  
 
In October, consumers’ views of their families’ current financial situation improved slightly while views of the situation six months from now softened. 
 
The consumer confidence results for November are slated to be released Nov. 28.