United States: Consumer confidence moves down in September on effects of Hurricane Harvey and Irma
September 26, 2017
The Conference Board’s consumer confidence index eased from a revised 120.4 points in August (previously reported: 122.9 points) to 119.8 points in September as the effects of Hurricanes Harvey and Irma heavily weighed on consumer confidence in Texas and Florida. The print was slightly below market expectations of a slightly smaller decline to 120.0. Despite the small dip, the index remains firmly above the 100-point threshold that separates optimism from pessimism among consumers.
The overall narrative remains largely unchanged. While the present conditions component declined in September, it remains unusually strong at 146.1. This continued to showcase consumers’ upbeat assessment of the labor market, which is buttressing households’ purchasing power even as employment growth slows down. In line with this, the labor differential—the difference between the percentage of respondents who state that jobs are plentiful and those who say that jobs are hard to get—narrowed 1.5 points in September, to 14.5, still a strong result by historical standards.
In contrast, the expectations index increased marginally to 102.2 from 101.7 a month before. Consumers’ outlook for the labor market improved markedly in September, with the percentage of those expecting more jobs to open up six months from now leaping 2.7 percentage points to 19.5 percent. Future income expectations also improved, with the percentage of consumers expecting income gains increasing in September, and the percentage expecting income to decline remaining unchanged.
Consumer sentiment remains underpinned by upbeat prospects in the labor market and income levels, which are more than offsetting the effects of Washington’s inability to roll out growth-inducing measures and an escalation in the bellicose rhetoric with North Korea. All told, September’s sentiment figure rounded out a strong Q3 and suggests that private consumption will remain a key contributor to growth in the quarter.
Author: David Ampudia, Economist