Consumers are less confident about the economy in October than last month, citing that, among other things, business conditions are bad, according to the Consumer Confidence Survey conducted by The Conference Board by Nielsen, a provider of information and analytics around what consumers buy and watch.
The index decreased to 98.6, down from September’s post-recession high of 103.5. The Present Situation Index decreased from last month’s 127.9 to 120.6, and the Expectations index decreased from 87.2 last month to 83.9.
In 1985, the index was set to 100, representing the index’s benchmark. This value is adjusted monthly based on results of a household survey of consumers’ opinions on current conditions and future economic expectations. Opinions on current conditions make up 40% of the index, while expectations of future conditions make up 60%.
“Consumer confidence retreated in October, after back-to-back monthly gains,” said Lynn Franco, The Conference Board director of economic indicators. “Consumers’ assessment of current business and employment conditions softened, while optimism regarding the short-term outlook retreated somewhat.”
“However, consumers’ expectations regarding their income prospects in the coming months were relatively unchanged,” Franco said. “Overall, sentiment is that the economy will continue to expand in the near-term, but at a moderate pace.”
Consumers who say business conditions are good decreased from 27.7% to 26.2%, and those saying conditions are bad increased from 15.8% to 17.7%.
They are also less optimistic about the labor market, with 24.3% saying jobs are plentiful, compared to 27.6% last month. Those who said jobs are hard to get, however, declined slightly from 22.3% to 22.1%.
Looking ahead, consumers were not very optimistic about the market in the short-term. Those saying they expect business conditions to improve over the next six months decreased from 17% to 16%, and those saying conditions would worsen increased from 10.8% to 12.2%.
Those saying more jobs will come in the months ahead decreased from 15.7% to 13.1%. On the other hand, those saying there will be fewer jobs in the months ahead also decreased from 18.1% to 17%. Those saying they expect an increase in income held steady at 17.5%, but those saying they expect a decrease in income declined from 10.4% to 9.8%.
“The drop in the expectations index may be a sign that the presidential election, which is now only two weeks away, is finally starting to worry some households, but it is clearly only a minor concern,” Capital Economics Economist Andrew Hunter said.
This decrease falls in line with other measures of consumer confidence.
The Index of Consumer Sentiment decreased to 87.9 at the beginning of October, its lowest level since last September and the second lowest level in the past two years, according to the Survey of Consumers conducted by the University of Michigan.
Consumers are taking a more cautious approach to their view of the economy, according to the latest Fannie Mae Home Purchase Sentiment Index.