US consumer confidence hits a five-month low

Consumer confidence in the United States fell for a third straight month in October as gloomier economic forecasts and rising prices dampened optimism.

Data released on Tuesday showed that The Conference Board's index dropped from 104.3 in September to 102.6 last month, which is a five-month low.

The group's current conditions index hit a one-year low of 143.1. The index of consumer confidence in the next six months -- Expectations Index -- dropped to its lowest level in five months. Inversely, a gauge of expected inflation rose last month.

High prices have continued to put pressure on Americans. Even though inflation has eased dramatically over the past year, its residual effects prevent a full confidence recovery.

"Consumers continued to be preoccupied with rising prices in general, and for grocery and gasoline prices in particular. Consumers also expressed concerns about the political situation and higher interest rates," Dana Peterson, Chief Economist at The Conference Board, said in a press release.

Moreover, consumers expressed worries about the Israel-Hamas war impacting the US economy. The Conference Board report showed that the decline in consumer confidence was evident across householders aged 35 and up, and not limited to any one income group.

The dip in consumer confidence comes at a time whenthe US economy has shown remarkable resilience. The US economy grew almost 5 per cent in the July-September quarter, as higher wages from a tight labor market helped to fuel consumer spending and businesses restocked to meet the strong demand.

"Not only is the economy surprisingly resilient, we also got productivity-driven growth for two consecutive quarters in 2023, meaning the business cycle still looks very solid," Reuters quoted Brian Bethune, an economics professor at Boston College, as commenting on the report by theCommerce Department's Bureau of Economic Analysis.

However, the latest report showed that consumer fears about an impending recession remain elevated, with the group anticipating a short and shallow economic contraction in the first half of 2024.

On the employment front, reports of "plentiful" employment fell for the fourth consecutive month in October. But for the first time since June, the gap between those who think jobs are "plentiful" and those who say they are "hard to get" widened. This is a key indicator for economists tracking the health of the labour market.

(With inputs from agencies)