American consumer confidence takes a hit in October | So Good News
WASHINGTON (AP) – U.S. consumer confidence weakened this month as concerns about inflation eased somewhat in recent months.
The Conference Board reported Tuesday that its consumer confidence index fell to 102.5 in October, from 107.8 in September. Consumers had gained confidence in the last two months when the rise in gas prices was moderated even though the price of other essentials remained high.
The current business survey – which measures consumers’ assessment of current business conditions and the job market – fell sharply to 138.9 from 150.2 in September.
The board’s expectations – a six-month measure of consumers’ views on the economy, business and jobs – fell to 78.1 from 79.5 last month.
Lynn Franco, director of the Conference Board of Economic Indicators, said that a reading below 80 of the number of expectations is a level related to the recession, which means that the risk seems to be increasing.
The government said recently that inflation in the United States increased rapidly in September, and the cost of housing and other necessities is increasing the pressure on families, eliminating wage gains and all but guaranteeing that the Federal Reserve will continue to raise interest rates strongly.
Since March, the Fed has been using its fastest rate in decades to try to curb inflation that has hit families with higher prices for food, gas, rent and other necessities.
New evidence that workers are struggling with inflation. (SOURCE: CNN)
In late September, the Fed raised its short-term benchmark, which covers most consumer and commercial loans, to 3% to 3.25%, the highest rate since early 2008. another increase of 0.75 percent when the Fed meets next week.
Franco said lower prices will continue to erode confidence and erode spending “which could lead to a difficult holiday season for retailers.”
Earlier this month, the government reported that the pace of sales at US retailers was unchanged in September from August. Rising rents and low food prices are money Americans were willing to spend elsewhere.
Despite the drop in overall confidence, Franco noted that consumers’ intentions to buy big-ticket items — major appliances and cars — rose slightly this month.
General Motors reported Tuesday that its third quarter profit rose 36.7% on strong sales.
Chief Financial Officer Paul Jacobson said the company sees no sign that demand for new cars is slowing despite high interest rates and rising prices. “Prices remain strong, demand remains strong for our products,” he told reporters early Tuesday.
The Conference Board also noted that home buying intentions stabilized again this month. It’s a surprising development because sales of existing homes have fallen for eight straight months while U.S. home prices rose nearly 7% last week.
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