Consumer confidence jumps 7.5 points to 91.7, but September was revised up and spending plans fell

The Conference Board's Consumer Confidence Index rose 7.5 points to 91.7 in October (1985=100), the first increase in four months. The survey ran October 1 to 21.

The base moved

The 7.5-point gain is measured from a September figure of 84.2, which the Board calls a slight upward revision. When we reported September, the index was 81.9. Against that first print, October is up 9.8 points. The comparison most readers will see is the smaller one, from the revised base. The level is the same either way: 91.7.

What is inside

• Present Situation Index: up 8.6 points to 120.4. The share calling current business conditions "good" rose to 21.4% from 18.8%. The jobs differential (plentiful minus hard to get) improved 2.4 points to +5.3%.
• Expectations Index: up 6.9 points to 72.6, which the Board says only partly reverses three straight monthly declines.
• Inflation expectations: the average 12-month expectation fell but stays elevated at 5.8%, down from the 6.1% we reported for September.

Senior economist Fergus McCormick said the recovery was "in line with retail gasoline prices easing from September to October," but that confidence remains on a long-term downward trend. Write-in comments about prices, food and groceries, and oil and diesel rose, while mentions of war and conflict eased for a second month and mentions of jobs ticked up.

Expectations: less gloomy, still negative

All three components of the Expectations Index improved. Net expectations for business conditions rose 5.7 points to negative 3.0%. Net expectations for the labor market rose 1.8 points to negative 11.1%, so more consumers still expect jobs to get harder to find than easier. Net expectations for household income improved 3.5 points to positive 6.7%, meaning households on balance still expect their pay to rise over the next six months.

The current-conditions side is firmer. Net views of present business conditions climbed 4.8 points to positive 3.6%, reversing a notably negative September, the Board said. The Board also reported that confidence improved across all political affiliations, much more so among Republicans, and that Gen X, Baby Boomers and the Silent Generation continue to trail Gen Z and Millennials by a widening margin.

Asked about the odds of a US recession over the next 12 months, "somewhat likely" remained the most common answer. Those recession and family-finance questions are reported separately and are not part of the index calculation.

The part for business owners

Better mood did not translate into bigger plans. The Board says consumers planned less spending on services and durable goods over the next six months, which it links to higher price levels eroding purchasing power. That is the line that matters to a restaurant, salon or contractor: sentiment is a survey, spending plans are the closer thing to an order book.

The split by group also matters. On a six-month average, only consumers under 35 and households earning $100,000 or more showed higher confidence. Customers outside those two groups have not yet joined the recovery, per the Board.

The reading arrives a day before the Federal Reserve's announcement. Consumers still expect higher interest rates over the next 12 months, and more now expect stock prices to rise than fall.

Sources: The Conference Board. Preliminary October results. This is economic information, not investment advice.