Consumer Confidence Decreases Sharply in October

The Conference Board Consumer Confidence Index, which had declined moderately in September, decreased sharply in October.  The Index now stands at 71.2 (1985=100), down from 80.2 in September.  The Present Situation Index decreased to 70.7 from 73.5.  The Expectations Index fell to 71.5 from 84.7 last month.

"Consumer confidence deteriorated considerably as the federal government shutdown and debt-ceiling crisis took a particularly large toll on consumers' expectations.  Similar declines in confidence were experienced during the payroll tax hike earlier this year, the fiscal cliff discussions in late 2012, and the government shutdown in 1995/1996.  However, given the temporary nature of the current resolution, confidence is likely to remain volatile for the next several months", said Lynn Franco, Director of Economic Indicators at The Conference Board.

Consumers' assessment of current conditions declined moderately.  Those claiming business conditions are "good" decreased to 19.0 percent from 20.7 percent, however, those claiming business conditions are "bad" edged down to 23.0 percent from 23.9 percent.  Consumers' appraisal of the job market was less favorable than last month.  Those saying jobs are "plentiful" was virtually unchanged at 11.3 percent from 11.4 percent, while those saying jobs are "hard to get" increased to 35.8 percent from 33.6 percent.

Consumers' outlook for the labor market was also more pessimistic.  Those anticipating more jobs in the months ahead decreased to 15.3 percent from 16.1 percent, while those anticipating fewer jobs increased to 22.7 percent from 19.1 percent.  The proportion of consumers expecting their incomes to increase rose to 15.8 percent from 15.1 percent, however those expecting a decrease rose to 15.4 percent from 13.9 percent.

Source: October 2013 Consumer Confidence Survey, The Conference Board