The two main measures of household confidence remain on a flat trend since the start of the year, suggesting that household spending will remain near its recent modest pace.
That’s the big-picture takeaway from the latest data through October for consumer confidence and consumer sentiment as summarized in the graphic below.
Although consumer confidence dropped in October on a month-to-month basis as reported this week, it remains higher than a year ago.
- Most encouraging is that the present situation component of confidence remains much higher than a year ago. This can be a positive sign that household spending—especially among lower-income households—will gain strength in the short term.
- The recent weakness in confidence is focused in expectations of the future. This likely reflects a response—primarily among upper income households—to stock market volatility and growing political concerns as the U.S. presidential campaigns gear up.
Impact @Work: Expect spending trends among your customers to remain close to the recent trend on average, but greater differences emerge among groups. Lower-income households—led by younger households—should sustain or strengthen spending. Upper-income households—especially older households—may become somewhat more cautious.