September Consumer Confidence Rebounds from 6-Year Low
The Conference Board, New York, said its September Consumer Confidence Index posted its strongest one-month increase in 17 years, after falling in July and August to a six-year low.
The Index now stands at 101.8, up from 86.3 in August. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – increased from 85.8 to 98.5. The Expectations Index – based on consumers’ short-term outlook for income, business, and labor market conditions – increased from 86.6 in August to 104.0 this month.
“Consumer Confidence increased sharply in September, after back-to-back monthly declines, but remains below pre-pandemic levels,” said Lynn Franco, Senior Director of Economic Indicators with The Conference Board. “A more favorable view of current business and labor market conditions, coupled with renewed optimism about the short-term outlook, helped spur this month’s rebound in confidence. Consumers also expressed greater optimism about their short-term financial prospects, which may help keep spending from slowing further in the months ahead.”
Tim Quinlan, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said whether confidence remains below its pre-virus level might depend on additional economic stimulus.
“Rebounding confidence continues to point to increased spending,” Quinlan said. “Plans to buy a major appliance rose to a seven-month high of 49%, consistent with the rebound in goods spending. Still, with confidence recently mostly driven by higher-income households, confidence may still hinge on additional household stimulus.”
The report said consumers’ appraisal of current conditions rebounded in September. The percentage of consumers claiming business conditions are “good” increased from 16.0 percent to 18.3 percent, while those claiming business conditions are “bad” decreased from 43.3 percent to 37.4 percent. Consumers’ assessment of the labor market also improved. The percentage of consumers saying jobs are “plentiful” increased from 21.4 percent to 22.9 percent, while those claiming jobs are “hard to get” decreased from 23.6 percent to 20.0 percent.
Consumers were also more optimistic about the short-term outlook. The percentage of consumers expecting business conditions will improve over the next six months increased from 29.8 percent to 37.1 percent, while those expecting business conditions will worsen decreased from 20.7 percent to 15.8 percent. Consumers were more positive about the outlook for the labor market. The proportion expecting more jobs in the months ahead increased from 29.9 percent to 33.1 percent, while those anticipating fewer jobs decreased from 21.2 percent to 15.6 percent. Regarding their short-term income prospects, the percentage of consumers expecting an increase improved from 13.0 percent to 17.5 percent, while the proportion expecting a decrease declined from 16.0 percent to 12.6 percent.