The Conference Board said that consumer confidence fell sharply, down from 80.2 in September to 71.2 in October. This was the lowest index level since April’s 69.0 reading, essentially wiping out much of the gains this year. (Consumer confidence began the year in the aftermath of the fiscal cliff debate with a 58.4 reading in January.) As such, these findings closely mirror consumer sentiment data from the University of Michigan and Thomson Reuters, which was released last week. In both instances, the federal budget impasse frustrated many Americans, resulting in lower confidence.
In the Conference Board report, the largest decline occurred in the perceptions about the future. The expectations component has declined from 89.0 in August to 84.7 in September to 71.5 in October. This was the lowest level of expectations since March.
As usual, these types of indices tend to move on pocketbook issues. In this case, an increased number of respondents said that “jobs were hard to get” (up from 33.6 percent in September to 35.8 percent in October). At the same time, those anticipating their income to decrease rose from 13.9 percent to 15.4 percent.
The importance of this data is the impact on buying intentions. Unfortunately, the percentage of respondents planning to purchase a home (down from 6.5 percent to 5.9 percent) or automobile (down from 12.9 percent to 11.8 percent) fell for the month. However, the percentage of consumers planning to purchase an appliance rose from 48.8 percent to 50.4 percent, suggesting that not all elements were moving lower.
Chad Moutray is the chief economist, National Association of Manufacturers.