Index Rises 7.5 Points, Ending Four-Month Decline
World Large Enterprises Federation reported the October US consumer confidence index rose 7.5 points to 91.7, not only ending a four-month losing streak but also hitting the highest since June, beating all economists’ expectations in a Bloomberg survey. The survey showed the public turned more optimistic on the job market and business conditions, and a slight pullback in gasoline prices from September to October jointly lifted overall confidence. The prior September index had fallen to 84.2, the lowest since April 2014 and even below pandemic levels, making this rebound particularly notable.
Current Conditions and Outlook Improve Together, Long-Term Trend Still Weak
By breakdown, the present-situation index reflecting current conditions rose 6.9 points to 72.6, while the short-term expectations index for the next six months climbed 8.6 points to 120.4. The index is compiled through a monthly survey of public views on current economic conditions and future prospects, and as consumer spending is the main driver of US economic growth, it has long been seen as a key gauge of economic health. However, senior economist Fergus McCormick noted that despite the October rebound, consumer confidence remains in a multi-year long-term downtrend, with the public broadly dissatisfied with five straight years of elevated inflation.
Elevated Inflation Persists, Higher Rates Add to Burdens
Inflation data remains the biggest pressure. US Labor Department data showed September CPI up 3.7% year-on-year, above August’s 3.4%, with a 0.6% month-on-month gain marking the largest in five months. To curb inflation, the Federal Reserve raised its benchmark rate by 0.25 percentage points to about 3.9% six weeks ago, likely pushing up mortgage, auto-loan and credit-card borrowing costs. The Fed’s preferred PCE price index rose 3.4% year-on-year in August, better than July’s 3.7%, but above the 2.8% before the February 28 outbreak of the Iran war and well above the 2.5% when Trump took office in January 2025, with the government expected to release September PCE data tomorrow.
Limited Job Improvement, Wages Lag Prices
Job-market signals were mixed. The share of respondents saying jobs were plentiful rose from 24.3% in September to 26.7% in October, but the share saying jobs were hard to get still reached 21.4%. The Labor Department reported only 29,000 new jobs in September, far below the expected 90,000, with the unemployment rate edging up to 4.2%, and combined July-August payrolls revised down by 60,000. Average hourly earnings rose 3% year-on-year, the smallest gain since May 2021, showing wage growth failed to keep up with inflation. Ahead of next Tuesday’s midterm elections, high-price sentiment could affect incumbent President Trump and Republicans; Trump has blamed high prices on former President Biden, but inflation has continued to rise since he took office.