COVID-Weary Consumers Feeling Less Confident
The Conference Board, New York, said its Consumer Confidence Index declined slightly in October, following a sharp September increase.
The Index now stands at 100.9, down from 101.3 in September. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased from 98.9 to 104.6. However, the Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – decreased from 102.9 in September to 98.4 this month. The cutoff date for preliminary results was October 16.
“There is little to suggest that consumers foresee the economy gaining momentum in the final months of 2020, especially with COVID-19 cases on the rise and unemployment still high,” said Lynn Franco, Senior Director of Economic Indicators with The Conference Board.
Tim Quinlan, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said rising coronavirus case counts and lost momentum in the labor market could be headwinds in months ahead.
“While COVID was the catalyst for the collapse in confidence earlier this year, it is not clear that it remains the key driver in shaping consumer confidence now,” Quinlan said. “Despite a new wave of infections that lifted case counts to a record high in October, consumer confidence was largely unfazed.”
Consumers’ assessment of current conditions improved further in October. The percentage of consumers claiming business conditions are “good” was virtually unchanged, going from 17.6 percent to 17.5 percent, but those claiming business conditions are “bad” decreased from 37.0 percent to 33.9 percent.
Consumers’ assessment of the labor market was more favorable. The percentage of consumers saying jobs are “plentiful” increased from 23.6 percent to 26.5 percent, while those claiming jobs are “hard to get” decreased slightly from 20.3 percent to 19.9 percent.
Consumers, however, are now less optimistic about the short-term outlook than a month ago. The percentage of consumers expecting business conditions will improve over the next six months decreased slightly from 36.7 percent to 36.3 percent, while those expecting business conditions will worsen increased from 15.8 percent to 17.0 percent.
Consumers’ optimism regarding the job market was mixed. The proportion expecting more jobs in the months ahead increased slightly from 32.9 percent to 33.2 percent, but those anticipating fewer jobs also increased, from 16.1 percent to 20.2 percent.
Regarding their short-term income prospects, the percentage of consumers expecting an increase improved from 17.3 percent to 18.4 percent, but the proportion expecting a decrease also increased, from 13.0 percent to 14.2 percent.