A Conference Board survey showed that US consumer confidence rose in September for the second month in a row, buoyed by a flexible labor market and lower gasoline prices.
The organization said that the consumer confidence index rose to 108 points this month from 103.6 recorded in August. Economists polled by Reuters had expected a level of 104.5 points.
On the other hand, the survey’s current situation index, which is based on a consumer’s assessment of current business and business conditions, rose from 145.3 points in August to 149.6 this month.
Also on the rise was the expectations index, which rose to 80.3 this month from 75.8 in August, and is based on consumers’ short-term perspective on income, business and labor market conditions.
Lynn Franco, director of economic indicators at The Conference Board, noted that recession risks remain, despite the fact that inflation concerns dissipated this month and reached their lowest level since the beginning of the year.
12-month inflation expectations eased to 6.8%, the lowest since January and from 7% in August.
In the meantime, buying intentions varied, with intentions to buy cars and large appliances rising, while the desire to buy a home declined. The latter undoubtedly reflects the increase in mortgage rates and the cooling of the real estate market.
Although the Commerce Department report indicated that new home sales rose 28.8% to the seasonally adjusted annual rate of 685,000 units in August, this is because builders introduced incentives to liquidate inventory.
With the 30-year fixed rate mortgage at levels not seen since the Great Recession, the rebound in new home sales is expected to be temporary.
A fourth report noted that the S&P CoreLogic Case-Shiller National Home Price Index rose 15.8% annually in July, slowing from June’s 18.1% gain. In monthly terms, prices fell 0.3%, the first decline since the end of 2018.
Franco also predicted that improved confidence may bode well for consumer spending in the final months of the year, but high inflation and rate hikes by the Federal Reserve will continue as strong headwinds for short-term growth.
As for the labor market, 49.4% of consumers said jobs are plentiful, down from 47.6% in August. (with information from agencies)