U.S. Consumer Confidence Falls to Lowest Since June

(Bloomberg) --

U.S. consumer confidence unexpectedly fell to a four-month low as economic expectations dimmed, a warning sign that the consumer spending that’s been propping up the expansion may face challenges.

The Conference Board index, monitored by analysts as a signal of future consumer spending, dropped in October to 125.9 for a third-straight decline. The reading Tuesday missed the median forecast in a survey of economists, who had projected an increase. At the same time, the measure of views on present conditions rose, keeping it near historical highs.

Key Insights

• The unexpected decline and the weakest reading on expectations since January underscores how weakness in some corners of the economy may spread to the consumer. A key manufacturing gauge has fallen deeper into contraction and the labor market, while still robust, has shown some cracks recently with slower wage growth and a weaker pace of hiring.
• The measure of those saying they expect fewer jobs in six months rose to the highest since September 2016, while those seeing more jobs in the same period dropped.
• The report contrasts with other data on consumer confidence from the University of Michigan survey showing that sentiment rose in October as both current conditions and expectations increased.
• President Donald Trump tweeted Tuesday morning that consumer confidence was “very good” and that September housing sales were “up nicely.” Pending U.S. home sales posted the biggest annual gain since 2015, according to a National Association of Realtors report earlier Tuesday. Separately, the S&P CoreLogic Case-Shiller index showed home prices declined in August for the first time in a year.

Official’s View

Lynn Franco, director of economic indicators at the Conference Board, struck a more optimistic note: “Expectations weakened slightly as consumers expressed some concerns about business conditions and job prospects,” she said in a statement. “However, confidence levels remain high and there are no indications that consumers will curtail their holiday spending.”

Get More

• The share of respondents planning a vacation in the next six months climbed to a record even as buying plans for large purchases such as autos and appliances slipped. Plans for buying new cars fell to match the lowest since 2010.
• A gauge of those who say business conditions are currently good rebounded from a six-month low the prior month. However, the share of people seeing better business conditions in the future slipped to the lowest since March.

To contact the reporter on this story: Katia Dmitrieva in Washington at edmitrieva1@bloomberg.net

To contact the editors responsible for this story: Scott Lanman at slanman@bloomberg.net, Jeff Kearns, Vince Golle

©2019 Bloomberg L.P.