Lower gasoline prices and improving views of the job market lifted consumer sentiment
of ConsumerAffairsConsumer confidence rose sharply in October, reaching its highest level since June, as Americans expressed more optimism about current business conditions and the economy's near-term outlook.
Lower gasoline prices helped improve sentiment, but consumers remain frustrated by the high cost of groceries, energy, and other everyday necessities.
Americans are still cautious about major purchases, with fewer consumers planning to buy homes, cars, and expensive household goods in the coming months.
Gas prices are still high and worries about affordability are plentiful, but Americans are feeling somewhat better about the economy as the holiday shopping season approaches. However, that doesn't necessarily mean they're ready to open their wallets.
The Conference Board reports that its Consumer Confidence Index jumped 7.5 points in October to 91.7, up from a revised 84.2 in September. The increase brought confidence back to its June level, reversing some of the pessimism that had developed over the previous three months.
The improvement was driven largely by more favorable assessments of current business conditions and expectations for the next six months.
The Present Situation Index, which measures consumers' views of current business and employment conditions, increased 8.6 points to 120.4.
The Expectations Index, which measures consumers' outlook for income, business conditions, and employment over the next six months, rose 6.9 points to 72.6.
However, that measure remains below 80, a level the Conference Board has historically associated with an increased risk of recession.
Lower gas prices provide some relief
One factor behind the improvement appears to be the decline in gasoline prices between September and October.
"Consumer confidence advanced in October, driven primarily by improved perceptions of current and expected business conditions," said Fergus McCormick, senior economist at the Conference Board.
McCormick said the recovery coincided with easing gasoline prices, which can have an immediate impact on household budgets and consumers' perceptions of inflation.
But he cautioned that the improvement doesn't necessarily signal a lasting turnaround.
Despite October's increase, consumer confidence remains on a longer-term downward trend that has persisted for several years. Consumers continue to complain about high prices, particularly for food, groceries, oil, and diesel fuel. The survey also found that concerns about employment increased slightly.
Inflation expectations declined during October but remained elevated. Consumers said they expected prices to rise an average of 5.8% over the next 12 months.
That figure measures what consumers expect inflation to be, not the government's actual inflation rate.
Americans feel better about jobs and income
The October survey found that consumers were somewhat more upbeat about the labor market.
The percentage describing jobs as plentiful increased to 26.7%, compared with 24.3% in September. Meanwhile, 21.4% said jobs were hard to get, unchanged from the previous month.
Views of current business conditions also improved. The share of respondents describing conditions as good rose to 21.4%, up from 18.8% in September, while the percentage calling conditions bad declined to 17.8%.
Looking ahead, 17.7% expected business conditions to improve over the next six months, compared with 16.5% in September.
Consumers also became more optimistic about their incomes. Nearly 19% expected their income to increase over the next six months, while 12% expected it to decline.
Still, more than one-quarter of respondents expected fewer jobs to be available in the coming months.
Consumers aren't rushing to make big purchases
Perhaps the most significant finding for retailers and other businesses is that improved confidence isn't translating into stronger plans for spending.
The survey found that intentions to purchase automobiles and homes declined slightly, based on six-month moving averages. Consumers also reported weaker plans to purchase durable goods, including electronics, smartphones, computers, and tablets.
Spending plans for services generally declined as well, although entertainment categories such as movies, theater, and sporting events showed some resilience.
Travel plans also softened. The percentage of consumers planning a vacation during the next six months slipped to 43.3%, down from 44.2% in September. Among those planning vacations, more favored domestic travel, while fewer expected to travel internationally.
The findings suggest that even as consumers become less pessimistic about the economy, they remain sensitive to prices and cautious about taking on large expenses.
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Posted: 2026-10-28 12:47:06
