Consumer confidence drops more than expected in October as recession risk rises

Torsten Asmus

• After two months of gains, the Conference Board Consumer Confidence Index fell in October to 102.5 vs. 106.0 expected and 107.8 prior (revised from 108.0).
• "The Present Situation Index fell sharply, suggesting economic growth slowed to start Q4," said Lynn Franco, senior director of Economic Indicators at The Conference Board. "Consumers' expectations regarding the short-term outlook remained dismal. The Expectations Index is still lingering below a reading of 80 — a level associated with recession — suggesting recession risks appear to be rising."
• Present Situation Index, based on how consumers weigh current business and labor market conditions, slid to 138.9 from 150.2 in September (revised from 149.6).
• Expectations Index sank to 78.1 from 79.5 prior (revised from 80.3).
• Concerns about inflation, which had been declining since July, picked up again with fast and food prices driving the increase, Franco said. "Looking ahead, inflationary pressures will continue to pose strong headwinds to consumer confidence and spending, which could result in a challenging holiday season for retailers," she said.
• Editor's note: A previous version had an incorrect number for the October Expectations Index.
• Earlier this month, September CPI rose more than expected with core CPI at a 40-year high