Consumer Confidence Rises to Five Month High

U.S. consumer confidence rose in September for the second consecutive month amid lowering gas prices and a healthy job market.

The Conference Board’s Consumer Confidence Index increased to 108.0 in September up from 103.6 in August. It was the highest level since April. Consumer sentiment rose both for the current state of the labor market and business conditions.

The Present Situation Index— based on consumers’ assessment of current business and labor market conditions — rose to 149.6 from 145.3 last month. The Expectations Index— based on consumers’ short-term outlook for income, business, and labor market conditions — increased to 80.3 from 75.8.

“Consumer confidence improved in September for the second consecutive month supported in particular by jobs, wages, and declining gas prices,” said Lynn Franco, senior director of economic indicators at The Conference Board. “Concerns about inflation dissipated further in September—prompted largely by declining prices at the gas pump—and are now at their lowest level since the start of the year.”

Purchasing intentions in September were mixed. Intentions to buy automobiles and big-ticket appliances rose, while home purchasing intentions fell amid rising mortgage rates and a cooling housing market.

“Looking ahead, the improvement in confidence may bode well for consumer spending in the final months of 2022, but inflation and interest-rate hikes remain strong headwinds to growth in the short term,” Franco said.

Below are highlights from The Conference Board’s September report.

Present Situation
Consumers’ appraisal of current business conditions was more favorable in September.

• 20.8% of consumers said business conditions were “good,” up from 19.0%.
• 21.2% of consumers said business conditions were “bad,” down from 22.6%.

Consumers’ assessment of the labor market improved.

• 49.4% of consumers said jobs were “plentiful,” up from 47.6%.
• 11.4% of consumers said jobs were “hard to get,” down slightly from 11.6%.

Expectations Six Months Hence
Consumers were more positive about the short-term business conditions outlook in September.

• 19.3% of consumers expect business conditions to improve, up from 17.3%.
• 21.0% expect business conditions to worsen, down from 21.7%.

Consumers were more optimistic about the short-term labor market outlook.

• 17.5% of consumers expect more jobs to be available, up from 17.1%.
• 17.7% anticipate fewer jobs, down from 19.6%.

Consumers were mixed about their short-term financial prospects.

• 18.4% of consumers expect their incomes to increase, up from 16.6%.
• Conversely, 14.3% expect their incomes will decrease, up from 13.9%.