Consumer confidence fell for the third straight month in October to its lowest level in five months, a key survey of U.S. households showed Tuesday.
The closely followed index of consumer confidence compiled by the Conference Board fell to 102.6 from a revised 104.3 in September. Both the assessment of the present situation and the outlook of consumers declined.
The expectations index fell slightly and remains below the threshold of 80 that historically signals a recession within the next year. The Conference Board describes consumer fears of a recession as “elevated” and says it expects a “short and shallow economic contraction” in the first half of next year.
“Consumer confidence fell again in October 2023, marking three consecutive months of decline,” said Dana Peterson, Chief Economist at The Conference Board. “October’s retreat reflected pullbacks in both the Present Situation and Expectations Index. Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for grocery and gasoline prices in particular. Consumers also expressed concerns about the political situation and higher interest rates. Worries around war/conflicts also rose, amid the recent turmoil in the Middle East. The decline in consumer confidence was evident across householders aged 35 and up, and not limited to any one income group.”
The decline in the present situation index was driven by less optimistic views about the state of businesses conditions, with fewer consumers saying conditions are good and more saying they are bad. Consumers remain confident about the jobs market, however. Consumers were also a bit more confident about there family financial conditions, which may reflect the fact that inflation has come down a good deal from last year’s four-decade highs.
The expectations index, which measures the outlook for the next six months, saw a broad decline. Consumers were less confident about future business conditions, job availability, and household income.
“More than two-thirds of consumers still said recession is ‘somewhat’ or ‘very likely’ in October. The fluctuating soundings likely reflect ongoing uncertainty given mixed buying plans. On a six-month moving average basis, plans to purchase autos and appliances rose while plans to buy homes—in line with rising interest rates—continued to trend downward,” Peterson said.