US Consumer Confidence Falls to Three-Month Low | So Good News
(Bloomberg) — U.S. consumer confidence fell in October to a better-than-expected three-month decline as widespread inflation and growing worries about the economy weighed on Americans.
The Conference Board’s index fell to 102.5 from a reading of 107.8 in September, which was released on Tuesday. The median forecast in a Bloomberg survey of economists had called for a drop to 105.9.
Expectations – a measure of consumer sentiment six months out – fell to 78.1, while the group’s current outlook fell to 138.9, the lowest since April 2021.
The rebound in confidence underpins inflation and growing concerns that the Federal Reserve’s interest rate hikes will push the US into a recession, weighing on consumers. And with just two weeks to go before the midterm elections, it’s a worrying sign for President Joe Biden and Democrats as they try to keep their election short.
Read more: Inflation Begins to Drag on Consumers to Strengthen US Economy
“Inflation concerns — which have been easing since July — have resurfaced, with gas and food prices acting as the main drivers,” said Lynn Franco, the Conference Board’s senior director of economic indicators.
“Looking ahead, inflationary pressures will continue to pose a strong threat to consumer spending and spending, which could lead to a difficult holiday season for retailers,” he said.
There are already signs that consumers are changing their buying habits to accommodate higher prices. Consumers of Amazon.com Inc. skipped stock purchases during the company’s succession, and Coca-Cola Co. it said it benefited from building a diverse portfolio and mix of its products for price-conscious consumers.
Read more: Holiday shopping roars back to US with ‘huge’ discounts
What Bloomberg Economics Says…
“Financial pressures have dampened public demand. Housing sales and housing market activity have fallen sharply. Consumers have continued to reduce spending on goods, while cautiously spending on jobs.”
— Eliza Winger, economist
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Despite the difficulties, buying plans for cars, houses and major appliances such as washing machines and TVs all rose. Holiday plans are back.
The average rate of inflation over the next 12 months rose in October, the first increase since June. September data on the price index, which the Fed uses for its inflation target, and real consumer spending will be released on Friday.
Sentiment continued to be supported by the labor market, despite signs of cooling. The share of consumers who said that jobs are “too much” fell to 45.2%, the lowest since April 2021. Those who said that jobs are difficult reached the largest share since last September, although they remain the lowest in history.
–Courtesy of Chris Middleton.
(Adds Bloomberg Economics commentary)
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