The Consumer Confidence Index from The Conference Board rose in September, increasing by 15.5 points to 101.8. The index is constructed so that it equals 100 in 1985. Overall consumer confidence is in the middle of its long-term historical range (see first chart).
Both components of the index posted gains for the month. The present-situation component added 12.7 points to 98.5 while the expectations component gained 17.4 points, taking it to 104.0 from 86.6 in the prior month. While both components did post gains, the present situation index remains well below the pre-pandemic level while expectations are close to pre-pandemic levels.
According to The Conference Board, “A more favorable view of current business and labor market conditions, coupled with renewed optimism about the short-term outlook, helped spur this month’s rebound in confidence. Consumers also expressed greater optimism about their short-term financial prospects, which may help keep spending from slowing further in the months ahead.” While the monthly improvement is a positive sign, monthly volatility has been elevated recently and may be vulnerable to the harsh and divisive election environment as well as new developments in the progression of Covid-19.
Among the various regions of the country, the broad trends are similar with expectations holding up better than views of the current situation. For the nine regions, four of the nine expectations indexes are back above their December 2019 level while two are slightly below and three are significantly below December (see second chart). Only the West North Central region had a decline in the latest month, leaving that region at its lowest level since December.
The regional expectations indexes compare well to the present situation indexes. All nine of the regional present situation indexes are below their December 2019 level (see third chart). The East North Central index is at the best level, about 30 points below the December level while the New England index is more than 50 points below December. Furthermore, three of the nine indexes had declines in the latest month but all nine are above their recent lows.
Overall, consumer attitudes remain at historically modest levels, with sharply divergent signals from the present situation index and the expectations index. With an increasing negative intensity developing in the election cycle, uneven news surrounding the Covid-19 outbreak, and slowing recovery among many economic indicators, risks remain very high for the consumer sector and overall economy.