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American Consumers Could Bolster U.S. Economic Recovery
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American Consumers Could Bolster U.S. Economic Recovery

American consumers are ready to open their wallets and spend money again, according to a report released on Wednesday by The Conference Board.

The Consumer Confidence Index, a measure of how consumers assess their current and future situations, came at 113.8 in October, up from 109.8 in September, beating market expectations. That’s good news for the U.S. economy as it enters its last quarter of 2021.

“Consumer confidence improved in October, reversing a three-month downward trend as concerns about the spread of the Delta variant eased,” said Lynn Franco, senior director of Economic Indicators at The Conference Board. “While short-term inflation concerns rose to a 13-year high, the impact on confidence was muted. The proportion of consumers planning to purchase homes, automobiles, and major appliances all increased in October — a sign that consumer spending will continue to support economic growth through the final months of 2021.

“Likewise, nearly half of respondents (47.6%) said they intend to take a vacation within the next six months — the highest level since February 2020, a reflection of the ongoing resurgence in consumers’ willingness to travel and spend on in-person services.”

More analytically, the Consumer Confidence Index consists of two sub-indexes, the Present Situation Index, which is based on consumers’ assessment of current business and labor market conditions, and the Expectations Index, which is based on consumers’ short-term outlook for income, business, and labor market conditions.

Current Business Conditions

Consumers’ assessment of current business conditions was mixed in October. On the one side, 18.6% felt “good,” compared to 19.1% in September. On the other side, 24.9% considered things “bad,” down from 25.3%.

Meanwhile, consumers’ appraisal of the labor market was slightly more favorable, with 55.6% of consumers thinking jobs are “plentiful,” down from 56.5%, and 10.6% of consumers thinking jobs are “hard to get,” down from 13% in September.

Future Business Conditions

Consumers’ optimism about the short-term business conditions outlook was also mixed in October. On the one side, 24.3% of consumers expect business conditions to get better, up from 21.7%. On the other side, 21.1% expect business conditions to worsen, up from 17.6%.

Meanwhile, consumers felt optimistic about the short-term labor market outlook, with 25.4% of consumers expecting more job opportunities available soon, up from 21.3%, while 18.3% foresee fewer job opportunities, down from 19.9%.

In addition, consumers felt more optimistic about their short-term financial prospects, with 18.7% seeing higher incomes ahead, up from 16.9%, while 11.3% believe their incomes will drop, nearly unchanged from 11.4%.

The Conference Board consumer confidence report comes a week after the Census Bureau reported solid September retail sales.

The two reports could help Wall Street shake off fears that rising inflation could deter American consumers from spending and spoil the upcoming holiday season, though surprises can always be another report away.

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