United States: U.S. consumer sentiment wanes in October due to election jitters
October 25, 2016
In October, the Conference Board’s consumer confidence index reversed the gains recorded in the two previous months, dropping to 98.6 from 103.5 in September. The fall was sharper than to the 101.5 the markets had expected.
The fall in sentiment in October mainly reflected U.S. households’ more cautious view regarding the country’s current economic situation as well as its economic prospects. Accordingly, the present situation’s sub-indicator dropped from 127.9 in September to 120.6 in October and the expectations sub-indicator slipped from 87.2 in September to 83.9 in October.
In a statement, the Conference Board signaled that “consumers’ assessment of current business and employment conditions softened, while optimism regarding the short-term outlook retreated somewhat. However, consumers’ expectations regarding their income prospects in the coming months were relatively unchanged. Overall, sentiment is that the economy will continue to expand in the near-term, but at a moderate pace.”
Some analysts believe that the drop in confidence in October mainly reflected consumers’ nervousness related to the 8 November presidential election and a moderating labor market, which continues to expand steadily but has cooled from last year. Andrew Hunter, Economist at Capital Economics, commented:
“Although consumer confidence appears to have weakened a little, it remains at a decent level by past standards. Accordingly, this suggests that a more severe slowdown in consumption growth over the rest of the year should be avoided.”
Author: Ricardo Aceves, Senior Economist