Consumer confidence improved in October, according to new data from The Conference Board. Specifically, the headline sentiment index jumped from September’s downward-revised 135.3 print to 137.9 this month, the highest reading since September 2000. Americans’ opinions of both current and future economic conditions firmed in October, but the gap between the two gauges has increased and now hovers at a level often seen prior to a recession. This does not mean that an economic downturn is imminent, but it should serve as a reminder that the current expansion in the United States is already one of the longest in history, and that a recession within the next five years would therefore not be too surprising.
Helping delay that inevitable economic slowdown will be a strong consumer, and encouragingly the share of surveyed Americans citing plans to make large purchases (cars and homes) in the near future increased markedly in October. Labor market confidence continues to support consumption, and the differential between the percentage of surveyed Americans saying jobs are “plentiful” and those saying jobs are “hard to get” increased for the fourth month in a row in October to the best level since January 2001. Further, 21.9 percent of consumer respondents expect there will be more job openings in the months ahead, and 24.7 percent anticipate that they will receive a pay hike. Without those wage gains, though, current consumer spending growth may not be sustainable.
Sources: Econoday, The Conference Board, ZH, Bloomberg
Post author: Charles Couch