U.S. consumer confidence rose for the first time in four months, beating forecasts

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The Conference Board's index rose 7.5 points to 91.7 in October, returning to June levels after three monthly declines

David Paul Morris/Bloomberg via Getty Images

The Conference Board reported its Consumer Confidence Index gained 7.5 points, reaching 91.7 in October after a revised 84.2 reading in September. The reading returned to June levels, the organization said on Tuesday.

The index snapped a streak of three straight monthly declines, according to Bloomberg. The result came in above even the most optimistic forecast among the economists surveyed, according to Bloomberg.

The Present Situation Index, which reflects views of current business and labor market conditions, increased 8.6 points to 120.4. The Expectations Index, which reflects the short-term outlook for income, business and the labor market, recovered 6.9 points to 72.6. That partially reversed three consecutive monthly declines. The survey period, which covers the preliminary results, ran Oct. 1-21.

"Consumer confidence advanced in October, driven primarily by improved perceptions of current and expected business conditions," Fergus McCormick, senior economist for global indicators at the Conference Board, said in a statement. "The recovery was in line with retail gasoline prices easing from September to October."

McCormick said confidence remained on a long-term downward trend despite the increase. Consumers planned to rein in outlays for both services and durable goods during the coming half-year, which he said probably stemmed from elevated prices and lingering inflation that sapped their buying power.

Net views of current business conditions rose 4.8 percentage points to 3.6%. The share of consumers calling business conditions "good" was 21.4%, up from 18.8% in September, while 17.8% called them "bad," down from 20.0%.

The labor market differential, the share saying jobs are "plentiful" minus the share saying jobs are "hard to get," improved 2.4 percentage points to +5.3%. Some 26.7% of consumers said jobs were plentiful, up from 24.3%. The share describing jobs as hard to get was unchanged at 21.4%.

All three components of the Expectations Index improved. Net expectations for business conditions rose 5.7 percentage points to -3.0%. Net expectations for the labor market rose 1.8 points to -11.1%, and net expectations for household income rose 3.5 points to +6.7%.

Consumers' average 12-month inflation expectation declined but remained elevated at 5.8%. Write-in responses showed frustration with rising costs, with references to prices, food and groceries, and oil and diesel rising. Comments about war and conflict eased for a second straight month but remained elevated.

Plans to buy autos and homes declined slightly on a six-month moving average basis. Planned durable goods spending dropped across the board. The share of consumers planning a vacation in the next six months fell to 43.3% from 44.2%.

On a six-month moving average basis, only consumers under 35 and households earning at least $100,000 a year grew more confident. In October, confidence rose within every political affiliation, and Republicans posted the biggest gain.

The October reading follows a drop in September, when the index fell to its lowest level since 2014 as households grew more pessimistic about current conditions and the six-month outlook. That decline came after consecutive drops in July and August.

The Conference Board's next consumer confidence release is scheduled for Nov. 24 at 10 a.m. ET.

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