By The numbers: The index of U.S. consumer confidence rose to 113.8 in October from a revised 109.8 in the prior month, the Conference Board said Tuesday. The gain follows three straight declines in sentiment.
Economists polled by The Wall Street Journal had forecast a decline to 108.
Big picture: Consumer confidence has slumped since the index hit 128.9 in June mainly due to the coronavirus delta variant and rising prices faced by shoppers.
Ordinarily, such a steady decline in confidence would be a warning sign about the health of the economy, but economists say the healthy labor market and rising wages suggest the economy remains on firm footing.
Key details: Part of the survey that tracks how consumers feel about current economic conditions rose to 147.4 this month from 144.3 in September.
The index tracking what Americans expect over the next six months rose to 91.3 from 86.7.
A short-term gauge of inflation concerns rose to a 13-year high.
More than 64% of consumers expect higher interest rates one year from now. Only a third expect higher stock prices.
Consumers’ remained positive about the labor market. Some 55.6% of those surveyed said jobs “are plentiful,” down only slightly from a record 56.5% in September.
There was also a notable decline in the percentage of consumers who think jobs are “hard to get.”
What The Conference Board said: “Concerns about the spread of the delta variant eased,” said Lynn Franco, senior director of economic indicators at The Conference Board. The proportion of consumers willing to make major purchases increased this month, a sign that consumer spending should bolster growth.
Nearly half of respondents said they intend to take a vacation within the next six months – the highest level since the pandemic hit in early 2020, she noted.
What economists said: “Consumers’ improved optimism about the employment and income outlook looks to have offset the pinch of higher inflation. It also supports our forecast that real consumer spending growth will firm to 4.4% annualized in the fourth quarter, after slowing sharply to less than 1% annualized in the third quarter due to the Delta variant,” said Kathy Bostjancic, chief U.S. financial economist at Oxford Economics.
Market reaction: Stocks
DJIA,
+0.32%
SPX,
+0.67%
opened higher on Tuesday and saw further gains into record territory after the confidence data was released.
