By Reade Pickert with assistance from Chris Middleton
U.S. consumer confidence fell in October by more than expected to a three-month low as widespread inflation and growing concerns about the economic outlook weighed on Americans.
The Conference Board’s index decreased to 102.5 from a 107.8 reading in September, data out Tuesday showed. The median forecast in a Bloomberg survey of economists called for a drop to 105.9.
A measure of expectations -- which reflects consumers’ six-month outlook -- dropped to 78.1, while the group’s gauge of current conditions plunged to 138.9, the lowest since April 2021.
The pullback in confidence underscores how high prices across the economy and growing concerns that aggressive interest-rate hikes by the Federal Reserve will tip the U.S. into recession are weighing on consumers. And with just two weeks to go until midterm elections, it’s a worrisome sign for President Joe Biden and Democrats as they try to maintain their thin congressional majorities.
“Concerns about inflation -- which had been receding since July -- picked up again, with both gas and food prices serving as main drivers,” said Lynn Franco, senior director of economic indicators at the Conference Board.
“Looking ahead, inflationary pressures will continue to pose strong headwinds to consumer confidence and spending, which could result in a challenging holiday season for retailers,” she said.
There are already signs consumers are shifting their buying patterns to adapt to high prices. Amazon.com Inc. shoppers largely skipped pricey purchases during the company’s Prime sale sequel, and Coca-Cola Co. said it benefited from bundling different sizes and mixes of its products for price-conscious consumers.
Despite the pullback in sentiment, buying plans for autos, homes and major appliances like washing machines and TVs all rose. Vacation intentions retreated.
The median inflation rate seen over the next 12 months ticked up in October, the first increase since June. September data on the personal consumption expenditures price index, which the Fed uses for its inflation target, as well as real consumer spending will be released Friday.
Sentiment continued to be supported by the jobs market, though there are signs of cooling. The share of consumers who said jobs were “plentiful” fell to 45.2%, the lowest since April 2021. Those who say jobs are hard to get rose to the highest share since last September, though remained historically low.
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