Consumer Confidence Improved In September

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Doug Short
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Summary

  • The headline number of 108 was an increase of 4.4 from the final reading of 103.6 for August.
  • Statisticians may assign little significance to a regression.
  • Consumer confidence and small business sentiment have tracked one another fairly closely since the onset of the Financial Crisis.

Magnifier Forming Consumer Word On Blue Background

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By Jill Mislinski

The headline number of 108 was an increase of 4.4 from the final reading of 103.6 for August.

The Conference Board Consumer Confidence Index® increased in September for the second consecutive month. The Index now stands at 108.0 (1985=100), up from 103.6 in August. 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. "The Present Situation Index rose again, after declining from April through July. The Expectations Index also improved from summer lows, but recession risks nonetheless persist. 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."

"Meanwhile, purchasing intentions were mixed, with intentions to buy automobiles and big-ticket appliances up, while home purchasing intentions fell. The latter no doubt reflects 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." Read more

Putting the Latest Number in Context

The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP. The regression through the index data shows the long-term trend and highlights the extreme volatility of this indicator. Statisticians may assign little significance to a regression through this sort of data. But the slope resembles the regression trend for real GDP shown below, and it is a more revealing gauge of relative confidence than the 1985 level of 100 that the Conference Board cites as a point of reference.

Conference Board Consumer Confidence Index

For an additional perspective on consumer attitudes, see the most recent Reuters/University of Michigan Consumer Sentiment Index. Here is the chart from that post.

University of Michigan Consumer Sentiment Index

And finally, let's take a look at the correlation between consumer confidence and small business sentiment, the latter by way of the National Federation of Independent Business (NFIB) Small Business Optimism Index. As the chart illustrates, the two have tracked one another fairly closely since the onset of the Financial Crisis, although a spread appears infrequently, with the most recent spread showing up 2015 through present.

Conference Board Consumer Confidence Index

Original Post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

This article was written by

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