Conference Board Confidence Weakens Again In October, Inflation Expectations Jump

After reaching two year highs in July, The Conference Board consumer confidence survey has fallen for 3 straight months, declining from 104.3 (revised higher) in September to 102.6 in October (better than the 100.5 exp though). Both Present Situation (lowest since Nov 2022) and Expectations also fell (lowest since May), dragging the headline down to its lowest since May.

Source: Bloomberg

“Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for grocery and gasoline prices in particular,” said Dana Peterson, Chief Economist at The Conference Board.

“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.”

Assessments of the present situation were driven by less optimistic views on the state of business conditions, but consumers’ rating of current job availability held steady.

“Fewer consumers said that business conditions were good, and more said they were bad. Regarding the employment situation, slightly fewer consumers said that jobs were ‘plentiful’ compared to September, but the number saying jobs were ‘hard to get’ also declined. However, when asked to assess their current family financial conditions (a measure not included in calculating the Present Situation Index), those responding ‘good’ rose, and those citing ‘bad’ were little changed. This suggests consumer finances remain buoyant in the face of elevated inflation.”

Expectations for the next six months stayed below the recession threshold of 80, reflecting a decline in confidence about future business conditions, job availability, and incomes. As Peterson noted,

“the continued skepticism about the future is notable given US consumers – at least through the third quarter of this year – continued to spend heavily on both goods and services.”

Goldman points out that its Twitter Sentiment Index is soaring while mainstream sentiment surveys are slumping…

The labor market improved a smidge…

Source: Bloomberg

More problematically, average 12-month inflation expectations jumped notably amid ongoing complaints about higher prices…

Source: Bloomberg

More than two-thirds of consumers still said recession is ‘somewhat’ or ‘very likely’ in October. As Peterson highlighted,

“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.”

On a side-note, adding to recent business survey misery, Chicago PMI disappointed this morning, printing 44 vs 45 exp, below 50 (economic contraction) for the 14th straight month…

Source: Bloomberg

That is longest period of contraction since the dotcom bust in 2000/2001 (which was 16 months).

Bidenomics is crushing it!