The Conference Board Consumer Confidence Index decreased sharply in October, down 9 points from 80.2 in September to 71.2 in October. According to the Conference Board, the government shutdown had a negative impact on consumer confidence in the month. October’s decrease follows a moderate decline in September.
“Consumer confidence deteriorated considerably as the federal government shutdown and debt-ceiling crisis took a particularly large toll on consumers’ expectations.” Lynn Franco, director of economic indicators at The Conference Board, said. Similar declines in confidence were experienced during the payroll tax hike earlier this year, the fiscal cliff discussions in late 2012, and the government shutdown in 1995/1996. However, given the temporary nature of the current resolution, confidence is likely to remain volatile for the next several months.”
Consumers’ assessment of current conditions declined moderately. Those claiming business conditions are “good” decreased to 19% from 20.7%; however, those claiming business conditions are “bad” edged down to 23% from 23.9%. Consumers’ appraisal of the job market was less favorable than last month. Those saying jobs are “plentiful” was virtually unchanged at 11.3% from 11.4% last month, while those saying jobs are “hard to get” increased to 35.8% from 33.6%.
Consumers’ expectations, which had softened in September, decreased sharply in October. Those expecting business conditions to improve over the next six months fell to 16% from 20.6%, while those expecting business conditions to worsen increased to 17.5% from 10.3%.
Consumers’ outlook for the labor market was also more pessimistic. Those anticipating more jobs in the months ahead decreased to 15.3% from 16.1%, while those anticipating fewer jobs increased to 22.7% from 19.1%. The proportion of consumers expecting their incomes to increase rose to 15.8% from 15.1%; however, those expecting a decrease rose to 15.4% from 13.9%.