October consumer confidence improved. The Conference Board’s index rose 7.5 points to 91.7, up from a slightly revised 84.2 in September. In its release on Oct. 27, the group said better views of current and expected business conditions drove the gain, helped by easing retail gasoline prices.
What the October consumer confidence numbers show
Both parts of the index rose. The Present Situation Index, which reflects how consumers see current business and job conditions, climbed 8.6 points to 120.4. The Expectations Index, which captures the short-term outlook for income, business and job conditions, rose 6.9 points to 72.6. That partly reverses three straight monthly declines. The index is benchmarked to 1985 equaling 100.
Fergus McCormick, a senior economist at the Conference Board, said confidence “advanced in October.” He credited easing gas prices. But he also warned that the long-term trend is still down. For what is moving fuel costs, see our standing page on gas prices and Brent crude.
The caveats inside the October consumer confidence report
Spending plans told a different story. Consumers said they plan to spend less on services and durable goods over the next six months, according to the Conference Board. McCormick blamed higher prices and persistent inflation. Vacation plans slipped too, to 43.3% of consumers, down 0.9 points from September.
Inflation expectations remain a pressure point. Consumers’ average 12-month inflation expectations fell but stayed elevated at 5.8%. Write-in comments focused on rising costs, especially food, groceries and fuel. Mentions of war and conflict eased for a second month but stayed elevated.
How to read the October consumer confidence rebound
Confidence surveys capture mood, and mood has not been a reliable forecast of spending lately. The University of Michigan runs a separate measure, covered in our consumer sentiment report. It sits at a very different level because it asks different questions and weighs inflation and personal finances more heavily. The two surveys can diverge, and one month of improvement does not make a trend.
Look at the gap inside the Conference Board’s own numbers. The Present Situation Index is 120.4. The Expectations Index is 72.6. That is a spread of roughly 48 points. Households like today’s job and business conditions far more than what they expect ahead, so the headline gain deserves some caution.
Prices are what households are reacting to. The Federal Reserve said in its Oct. 28 policy statement that inflation remains elevated. The official price data come from the Bureau of Labor Statistics’ consumer price index. Our preview of this release explains how the index is built. Confidence tends to follow prices at the pump and the grocery store. That is why Thursday’s growth and inflation reports matter for what comes next.
What to watch
The Conference Board’s next release is scheduled for Nov. 24 at 10 a.m. ET. If gasoline keeps easing, October consumer confidence may turn out to be the start of a recovery. If energy prices turn back up, the improvement could fade fast. Households already say they are cutting back on bigger purchases.
Look at the details beneath the headline each month: the split between present conditions and expectations, the share of people planning big purchases, and the inflation outlook. A rebound driven by cheaper gas and little else is more fragile than one backed by better job prospects.
Editor’s take
Watch the spending intentions, not the headline. A seven-point jump in October consumer confidence is welcome. But people telling the survey they will spend less on services and durable goods is the line that matters for the economy. Until grocery and fuel costs stop dominating write-in comments, treat the rebound as relief, not a turning point.
