Consumer Confidence Rebounds in October - Update
The Conference Board Consumer Confidence Index slightly rebounded
in October 2010. The Index has fluctuated in a seesaw pattern for much of 2010, rising in August, falling in September, July and June, and improving from March to May.
For October 2010, the Index stands at 50.2, up slightly from 48.6 the previous month. Improvement in the forward-looking Expectations Index primarily drove the overall Index higher, although the Present Situation Index also mildly improved.
Consumers Take Brighter View of Current Condition
The Present Situation Index reversed four straight months of decline in October 2010, rising from 23.3 to 23.9.
Consumers’ assessment of current conditions slightly improved from September. Those saying business conditions are “bad” decreased to 46% to 41.9%, while those claiming business conditions are “good” edged up from 8.2% to 8.5%.
Consumers’ appraisal of the labor market was less favorable than in the previous month, however. Those claiming jobs are “hard to get” rose from 45.8% to 46.1%, while those stating jobs are “plentiful” slightly decreased from 3.8% to 3.5%.
Consumers More Optimistic about Future
Consumers’ short-term future outlook rose in October, climbing from 65.5 to 67.8. The percentage of consumers expecting business conditions will worsen over the next six months declined from 16.6% to 14.1%, while those anticipating business conditions will improve hiked from 15% to 16%.
Consumers were mixed about future job prospects. The percentage of consumers anticipating fewer jobs in the months ahead declined to 22% from 22.6%. However, the percentage anticipating more jobs declined to 14.1% from 14.5%. The proportion of consumers expecting an increase in their incomes declined to 9.1% from 10.3%.
LEI Also Optimistic
Another recent forward-looking Conference Board consumer index also offers a mildly optimistic signal on where consumer economic behavior is heading in 2010. The Conference Board’s most recent September 2010 Leading Economic Index (LEI) showed a 0.3% increase
[pdf]. The LEI has been mostly positive in the past year or so, going up in August and July 2010 following a mild decline in June 2010, slight improvement in May 2010, and flat performance in April 2010, which snapped 12 straight months of growth.
The LEI, which measures economic activity for the next six months, rose from 110.1 to 110.4. Between March and September 2010, the LEI rose 0.8%, down from 2%, growth recorded for the February-August 2010 period. The LEI declined for 20 straight months before increasing every month between April 2009 and March 2010.
CEI Slightly Improves
The Conference Board Coincident Economic Index (CEI) for the U.S. was unchanged in September 2010, remaining at 101.4 (2004 = 100) for the third straight month.
The LEI is a composite of 10 U.S. economic indices:
- Average weekly hours, manufacturing.
- Average weekly initial claims for unemployment insurance.
- Manufacturers' new orders, consumer goods and materials.
- Index of supplier deliveries – vendor performance.
- Manufacturers' new orders, nondefense capital goods.
- Building permits, new private housing units.
- Stock prices, 500 common stocks.
- Money supply.
- Interest rate spread, 10-year Treasury bonds less federal funds.
- Index of consumer expectations.
The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS
. The cutoff date for August’s preliminary results was October 19, 2010.