By Nathalie Voit
U.S. consumer confidence levels rose following three straight months of declines, according to a Conference Board report released Oct. 26. The Consumer Confidence Index topped 113.8 in October, up from a revised 109.8 in September.
The indicator surpassed many economists’ expectations that placed average estimates at 108.5, according to US News. The newfound confidence stemmed from easing concerns about the spread of the Delta variant, said Lynn Franco, senior director of economic indicators at the Conference Board.
“While short-term inflation concerns rose to a 13-year high, the impact on confidence was muted. The proportion of consumers planning to purchase homes, automobiles, and major appliances all increased in October—a sign that consumer spending will continue to support economic growth through the final months of 2021,” Franco said.
Nearly half of respondents (47.6%) surveyed by the Conference Board also said they planned to take a vacation within the next six months, the highest level since the start of the pandemic in February 2020.
The newfound reversal point to consumers’ willingness to travel and spend on goods and services, a major driver of economic growth. Confidence peaked to almost pre-pandemic levels in the spring but quickly weakened following the spread of the Delta variant, which took a toll on the country’s mood the last few months.
Other indices also reported substantial jumps. The Present Situation Index, which measures Americans’ assessment of current business and labor market conditions, increased to 147.4 in October from 144.3 last month. The Expectations Index, which tracks consumers’ short-term outlook for income, business, and labor market conditions, similarly improved to 91.3 from 86.7.
“Unsurprisingly, with robust labor market expectations, consumers are saying they want to spend again,” Drew Matus, chief market strategist for MetLife Investment Management, said.
The news comes amid a widespread shortage of goods that has left retailers scrambling for inventory, despite persistent demand on the part of consumers. Meanwhile, ongoing inflation threatens to dampen newfound demand just as Americans enter the crucial holiday shopping season.
“It’s the best of times and the worst of times,” says Tim Quinlan, managing director, and senior economist at Wells Fargo. “There’s never been a better time to look for a job, but then there’s the inflation numbers.”