US consumer confidence plummets in October

WASHINGTON– US consumer confidence weakened this month as concerns about inflation took hold after receding somewhat in recent months.

The Conference Board reported Tuesday that its consumer confidence index fell to 102.5 in October from 107.8 in September. Consumers had grown more confident in the previous two months as rising gasoline prices moderated slightly, although costs for other essentials remained high.

The business research group’s Current Situation Index – which measures consumers’ assessment of current business and labor market conditions – fell sharply to 138.9 from 150.2 in September.

The Board Expectations Index – a measure of consumers’ six-month outlook on income, business and working conditions – fell to 78.1 from 79.5 last month.

Lynn Franco, senior director of economic indicators for the Conference Board, said a reading below 80 for the expectations index is a level associated with recession, suggesting risk appears to be gaining ground.

The government recently reported that inflation in the United States accelerated in September, with the cost of housing and other necessities increasing the pressure on families, wiping out wage gains and virtually guaranteeing that the Federal Reserve will continue to rise. interest rates aggressively.

Since March, the Fed has implemented its fastest pace of rate hikes in decades in an attempt to rein in inflation that has punished households with soaring costs for food, gas, rent and other necessities.

In late September, the Fed raised its benchmark short-term rate, which affects many consumer and business loans, to a range of 3% to 3.25%, the highest level since the start of 2008. It was the central bank’s third consecutive three-quarter point. increase and most economists and analysts expect further increases before the end of the year, including another potential increase of 0.75 percentage points when the Fed meets next week.

Franco said inflationary pressures will continue to dampen confidence and spending “which could lead to a difficult holiday season for retailers.”

Earlier this month, the government reported that the pace of sales at US retailers was unchanged in September from August. Rising rents and food prices reduced the money Americans were willing to spend elsewhere.

Despite the drop in overall confidence, Franco noted that consumers’ intentions to buy big-ticket items – major appliances and cars – rose slightly this month.

General Motors on Tuesday reported that its third-quarter net profit rose 36.7% on strong sales.

Chief Financial Officer Paul Jacobson said the company saw no signs of slowing demand for new vehicles despite rising interest rates and inflation. “Prices remain strong, demand remains strong for our products,” he told reporters early Tuesday.

The Conference Board also noted that home buying intentions also rose this month. It’s a somewhat surprising development, as sales of existing homes have fallen for eight consecutive months as long-term US mortgage rates climbed almost 7% last week.

ABC News

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