The Conference Board's Consumer Confidence Index fell to 92.8 in October, down by 3.9 points from the revised 96.7 in September. This is the third consecutive decrease for the index, which is at its lowest level in seven months. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence was down across both portions of the Conference Board index. The Expectations index was responsible for the overall drop in the index, declining 5.7 points to 92.0 in October. This index is a measure of future economic activity.
The Present Conditions index, a measure of how consumers perceive the current state of the economy, declined 1.1 points to 94.2 in October.
The University of Michigan's Consumer Sentiment Index, a comparable index, also dropped in October, falling to 91.7 from 94.2 in September. The component indices were mixed. The Expectations portion of the index fell 4.2 points to 83.8 in October, while the Present Conditions index increased slightly to 104.0 from 103.7 in September.
Several factors are weighing on consumer confidence. High energy prices in the form of both gasoline prices and home heating costs discourage consumers. Labor market reports in the last couple of months have been modest. The stock market is little changed from the start of the year. In addition, rising interest rates and high household debt are affecting consumer confidence.
Despite recent declines, consumer confidence is still expected to gradually improve over time, provided that energy prices moderate and job growth strengthens. Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence is a closely watched economic indicator.
Sources: www.conference-board.com
www.economy.com
