After reaching a 14-year high in March 2018 of 101.4, consumer confidence has slipped slightly from September’s figure of 100.1 to 98.6 in October according to a University of Michigan report released earlier today.
- Consumer confidence is still at near-historic highs after dropping from 100.1 to 98.6.
- October figures are weaker than anticipated.
- Current conditions sentiment has dropped from 115.2 to 113.1 - this measures the public’s perception of their financial situation.
- The expectations measure decreased from 90.5 to 89.3.
The survey showed that respondents still have high hopes from employment opportunities and job growth in 2019 despite wages being weaker than desired in some areas. Short-term inflation increases were largely viewed as impermanent among respondents.
The trade war between America and China continues to affect consumer sentiment with persistent concern that American businesses may be negatively affected by tariffs.
"The Consumer Sentiment Index has been higher thus far in 2018 (98.5) than in any prior year since 2000, which was the last year of the longest expansion since the mid-1800s," Richard Curtin, chief economist for The University of Michigan's survey, said in a statement. "Importantly, stock price declines, rising inflation and interest rates, and the negative mid-term election campaigns, have not acted to undermine consumer confidence."
Curtin went on to state that the "tipping point toward escalating pessimism has not been reached" and that the resilience was primarily due to the prevailing belief that the economy would produce robust job growth during the year ahead, even if overall wage growth remained dismal.”
The survey indicates that customers now place more value on job security than wage increases, a result of market uncertainty following the recession/2008 crash as well as an aging workforce.
500 consumers were asked for their outlook on economic prospects to gauge consumer sentiment on inflation, personal finances, the jobs market, interest rate, and national monetary policy.
Buying conditions of durables was down one point from 164 after a preliminary reading indicating 166 for October. The rate of inflation over the next 5 to 10 years was read at 2.4% as opposed to last month’s figure of 2.5%, and the rate of inflation for 2019 was projected by survey respondents to be 2.9% compared to a reading of 2.7% in September.