Consumer Confidence Posts Moderate September Increase

The Conference Board, New York, said its Consumer Confidence Index rose for the second straight month.  

The Index rose to 103.0, up from 101.3 in August. The Present Situation Index increased from 115.8 in August to 121.1 in September–an eight-year high–while the Expectations Index edged down to 91.0 from 91.6 in August.  

“Consumers’ more positive assessment of current conditions fueled this month’s increase,” said Lynn Franco, director of economic indicators with The Conference Board. “Consumers’ expectations for the short-term outlook, however, remained relatively flat, although there was a modest improvement in income expectations. Thus, while consumers view current economic conditions more favorably, they do not foresee growth accelerating in the months ahead.”  

Consumers’ appraisal of current conditions was more positive in September. Those saying business conditions are “good” increased from 23.7 percent to 28.0 percent, while those claiming business conditions are “bad” declined modestly from 17.8 percent to 16.7 percent. Consumers were somewhat mixed about the job market. Those stating jobs are “plentiful” increased from 22.1 percent to 25.1 percent, however those claiming jobs are “hard to get” also rose from 21.7 percent to 24.3 percent.  

The report also said consumers’ optimism about the short-term outlook was little changed in September. The percentage of consumers expecting business conditions to improve over the next six months increased from 16.6 percent to 17.9 percent, but those expecting business conditions to worsen also increased, from 9.1 percent to 10.3 percent.  

Consumers’ outlook for the labor market was mixed. Those anticipating more jobs in the months ahead was virtually unchanged at 15.0 percent, while those anticipating fewer jobs increased from 14.5 percent to 15.8 percent. The proportion of consumers expecting their incomes to increase improved from 16.2 percent to 19.1 percent, while the proportion expecting a decline inched up from 9.8 percent to 10.1 percent.  

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said confidence jumped despite equity volatility resulting from economic turmoil in China.  

“With consumer confidence remaining at a healthy level and the strong numbers from yesterday’s personal income and spending report, we expect that consumer spending will help to boost growth in the third quarter reading,” Vitner said. “It appears as if the tightening labor market and strengthening domestic economy have increased incomes. This combined with improving confidence despite the global turmoil and headlines, should lead to upward revisions to analysts’ forecast for personal consumption in [the third quarter].”