Consumer Confidence Improved Again in September

September 27, 2022 by Dan McCue
Consumer Confidence Improved Again in September
A portion of the sales floor at Macy's flagship store in New York. (Photo by Dan McCue)

NEW YORK — Consumer confidence jumped to a five-month high this month as falling gas prices helped ease the pinch of stubbornly persistent inflation.

According to The Conference Board, the nonpartisan, member-driven think tank, its Consumer Confidence Index® increased in September for the second consecutive month. 

The Index now stands at 108.0 (1985=100), up from 103.6 in August. 

The organization’s Present Situation Index — based on consumers’ assessment of current business and labor market conditions — rose to 149.6 from 145.3 last month. 

The Expectations Index — based on consumers’ short-term outlook for income, business, and labor market conditions — increased to 80.3 from 75.8. 

“Consumer confidence improved in September for the second consecutive month supported in particular by jobs, wages, and declining gas prices,” said Lynn Franco, senior director of Economic Indicators at The Conference Board, in a written statement. 

“The Present Situation Index rose again, after declining from April through July. The Expectations Index also improved from summer lows, but recession risks nonetheless persist,” Franco said. “Concerns about inflation dissipated further in September … and are now at their lowest level since the start of the year.”

Nevertheless, The Conference Board found that consumers’ purchasing intentions were “mixed,” with intentions to buy automobiles and big-ticket appliances up, while home purchasing intentions fell. 

“The latter no doubt reflects rising mortgage rates and a cooling housing market. Looking ahead, the improvement in confidence may bode well for consumer spending in the final months of 2022, but inflation and interest-rate hikes remain strong headwinds to growth in the short term,” Franco said.

The Federal Reserve has been raising interest rates sharply to tame the highest inflation in 40 years. 

These higher rates increase borrowing costs for houses, new cars and other big-ticket items, and, the Fed hopes, its moves will eventually slow the overheated post-pandemic economy.

Consumers’ View of the Present

Consumers’ appraisal of current business conditions was more favorable.

In September, 20.8% of consumers said business conditions were “good,” up from 19.0% and 21.2% of consumers said business conditions were “bad,” down from 22.6%.

Consumers’ assessment of the labor market also improved with 49.4% of consumers saying jobs were “plentiful,” up from 47.6%. And 11.4% of consumers said jobs were “hard to get,” down slightly from 11.6%.

Expectations Six Months From Today

Consumers were more positive about the short-term business conditions outlook in September with 19.3% of consumers expecting business conditions to improve, up from 17.3% and 21.0% expecting business conditions to worsen, down from 21.7%.

Consumers were more optimistic about the short-term labor market outlook with 17.5% of consumers expecting more jobs to be available, up from 17.1% and 17.7% anticipating fewer jobs, down from 19.6%.

Consumers were mixed about their short-term financial prospects with 18.4% of consumers expecting their incomes to increase, up from 16.6% and 14.3% expecting their incomes to decrease, up from 13.9%.

The monthly Consumer Confidence Survey®, based on an online sample, is conducted for The Conference Board by Toluna, a technology company that delivers real-time consumer insights and market research through its innovative technology, expertise, and panel of over 36 million consumers. The cutoff date for the preliminary results was Sept. 20.

Dan can be reached at [email protected] and at https://twitter.com/DanMcCue.

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