The Conference Board's Consumer Confidence Index® rose in October to the highest level since January. The index increased to 108.7 this month from September's upwardly revised 99.2. This month's reading was much better than expected compared to the 99.5 forecasted.
The Present Situation Index, which is based on consumers' assessment of current business and labor market conditions, decreased from 123.8 to 138.0 in October. Meanwhile, the Expectations Index, which is based on consumers' short-term outlook for income, business, and labor market conditions, increased from 82.8 to 89.1 in October. Note that a level of 80 or below for the Expectations Index historically signals a recession within the next year.
“Consumer confidence recorded the strongest monthly gain since March 2021, but still did not break free of the narrow range that has prevailed over the past two years,” said Dana M. Peterson, Chief Economist at The Conference Board. “In October’s reading, all five components of the Index improved. Consumers’ assessments of current business conditions turned positive. Views on the current availability of jobs rebounded after several months of weakness, potentially reflecting better labor market data. Compared to last month, consumers were substantially more optimistic about future business conditions and remained positive about future income. Also, for the first time since July 2023, they showed some cautious optimism about future job availability.
“October’s increase in confidence was broad-based across all age groups and most income groups. In terms of age, confidence rose sharpest for consumers aged 35 to 54. On a six-month moving average basis, householders aged under 35 and those earning over $100K remained the most confident.”
Background on the Consumer Confidence Index
The Conference Board Consumer Confidence Index measures the consumers attitudes and confidence in the economy, business conditions, and labor market, with higher readings indicating higher optimism. The general assumption is that when consumers are more optimistic they will spend more and stimulate economic growth. However, if consumers are pessimistic then spending will decline and the economy may slow down. The index is based on a 5 question survey, with 2 questions related to present conditions and 3 questions related to future expectations. The survey began in 1967 and was conducted every two months but changed to monthly reporting in 1977, which is where our data begins.