US Consumer Confidence Dips As Jobs Outlook Wanes

The Consumer Confidence Index dropped in October to 100.9, a new six-month low that followed a high of 101.3 in September, according to a Conference Board statement on Tuesday (Oct. 27).

The Present Situation Index — a measure of what people think about the current business climate and labor market — hit 104.6, up from 98.9. The Expectations Index — an assessment of people’s short-term outlook for income, business and labor — dropped to 98.4 from 102.9.

“Consumers’ assessment of current conditions improved while expectations declined, driven primarily by a softening in the short-term outlook for jobs,” said Lynn Franco, senior director of economic indicators at The Conference Board, in the statement.

“There is little to suggest that consumers foresee the economy gaining momentum in the final months of 2020, especially with COVID-19 cases on the rise and unemployment still high,” Franco added in the statement.

About 70 percent of economic activity is driven by consumer spending, the Associated Press (AP) said in a report Tuesday. Any drop in confidence causes economists to take notice, particularly as holiday shopping gets closer.

The loss of confidence could be caused by a combination of surging COVID-19 cases, record-high unemployment and fears surrounding the upcoming presidential election, the AP reported.

“All of the negativity that accompanies presidential campaigns tends to weigh down on confidence in the month before an election,” Stephen Stanley, an economist with Amherst Pierpont, told the AP. “Though some may also blame the uptick in the virus.”

The Conference Board, founded in 1916, publishes the Consumer Confidence Index on the last Tuesday of each month.

The Consumer Confidence Index in July was 92.6, which missed projections of 95. The June index was 98.3.

A June PYMNTS survey indicated that people were anticipating that the pandemic would stretch into February 2021. Comparatively, a March survey showed that the expectation was that the pandemic would be over by July.

The June survey also found that people were less worried about contracting the virus compared to how they felt in March. Worried or not, the majority of respondents did not anticipate returning to their pre-pandemic way of life anytime soon.

Small- to medium-sized businesses (SMBs) are more pessimistic than they were when the pandemic first hit, a September PYMNTS Main Street business survey showed. Originally, the average Main Street business thought the pandemic would last 177 days. Now that estimate has stretched into April 2021.