Consumer Confidence Marks Big Gain Despite Inflation Concerns

One week ahead of the election, we’re living in what might charitably be called uncertain times.

And yet, as measured by The Conference Board’s latest reading of its Consumer Confidence Index, consumers are optimistic about what’s on the horizon.

As reported on Tuesday (Oct. 29) the overall reading of the index surged to 138, for current conditions, up from 99.2 in September. That’s the biggest leap since March of 2021.

The “expectations” index of future conditions was up 8% to 89.1.

In the statement that accompanied the results, the overall leap “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.”

The data showed that, per Peterson, confidence was “broad-based across all age groups and most income groups.” As to those most optimistic overall, confidence rose most sharply for consumers aged 35 to 54 — and was higher for households earning more than $100,000 annually.

Inflation’s Expected to Rise

And yet, we note there are, arguably, some mixed signals in the data. The Conference Board noted that the share of consumers expecting higher interest rates over the next 12 months increased to 47.5% after declining for four months in a row.

“Write-in responses showed that consumers welcomed the recent reduction in interest rates but felt that levels were still too high,” per the release. Average 12-month inflation expectations rose to 5.3% in October from 5.2% in September, as food and services prices continued to increase.

Spending intentions remained mixed, as well — but there may be bump in spending on experiences. The Conference Board said that purchasing plans for homes and new cars continued to increase.

“Consumer buying plans for big-ticket appliances were mixed and buying plans for electronics were slightly down. Regarding services, consumers’ priorities were little changed, but they were keen to spend a bit more on some discretionary items going forward. “Plans to dine out and stay in hotels popped in October,” the Board wrote.

Per the report, 21.4% of consumers said business conditions were “good,” up from 18.6% in September.  And 35.1% of consumers said jobs were “plentiful,” up from 31.3% in September, while 18.9% of consumers expected their incomes to increase, unchanged from September, per the report.

Taken on its own, the Conference Board’s report might be a strong signal for holiday spending, at least into the election month and various Black Friday deals. But other reports — notably, last week’s details from the Federal Reserve via its Beige Book — paint a less sanguine portrait. As PYMNTS reported, of the 12 district bank regions surveyed by the Fed, seven districts have put forth neutral to negative signals on consumer spending; five districts have said that the spending trends have been somewhat positive. The sentiment gauged by the Fed, then, leans toward the downside.