Consumer confidence jumps 7.5 points to 91.7 in October

Consumer confidence in the United States rose by 7.5 points in October, reaching a level of 91.7, according to data released Tuesday by The Conference Board. The increase followed a drop in September, when the index had fallen to 84.2. That September figure marked the lowest reading in the survey since April 2014, a level lower than any point during the pandemic.

The primary factor driving the October improvement was a modest decrease in retail gasoline prices. Fergus McCormick, a senior economist at The Conference Board, noted that the recovery in confidence coincided with this relief at the pump. However, he added that the index remains on a long-term downward trend that has persisted over the past few years.

Specific components of the survey showed broad gains. The assessment of current business and labor market conditions increased by 6.9 points to 72.6. Meanwhile, consumer expectations for the six months ahead rose by 8.6 points to reach 120.4. Despite these numerical improvements, written responses from respondents continued to reflect pessimism, with frequent references to the high cost of energy, goods, and services.

Gasoline prices remain a central concern for households. According to the automotive club AAA, the national average price for a gallon of regular gasoline stood at $4.27 on Tuesday. This is down from $4.48 a month earlier but significantly higher than the $3.05 average recorded at the same time last year.

The economic backdrop remains challenging as the midterm elections approach in two weeks. The Department of Labor reported earlier this month that consumer price inflation accelerated in September. The consumer price index rose 3.7 percent compared to the same period last year, up from 3.4 percent in August. On a monthly basis, costs increased by 0.6 percent from August to September, the largest gain in five months.

The Federal Reserve raised its benchmark interest rate by a quarter point six weeks ago, the first increase since 2023. This move pushed the key rate to approximately 3.9 percent. The central bank indicated that another rate hike could occur later this year, though few analysts expect it to happen at the Fed meeting scheduled for this week. Higher rates are expected to translate into increased borrowing costs for mortgages, auto loans, and credit cards.

The government will publish September data for the Personal Consumption Expenditures price index, the Federal Reserve's preferred inflation measure, on Thursday. The PCE index rose 3.4 percent in August compared to the year prior, a figure slightly lower than the 3.7 percent increase in July but higher than the 2.8 percent rate recorded before the war with Iran began on February 28.