Report: Consumer Confidence Recovers in October

Author: Tory Barringer October 30, 2014Share on facebookShare on twitterShare on emailShare on pinterest_shareMore Sharing Services31

Consumer confidence bounced back in October, thanks to a sharp rebound in Americans' outlook for the economy.

The Conference Board's Consumer Confidence Index, which fell to a revised reading of 89 in September, surged back up to 94.5 in the group's latest report.

The recovery came mostly from a spike in the consumer expectations component, which jumped nearly nine points to 95, the Conference Board reported. The Present Situation Index, meanwhile, edged up to 93.7 from 93 in September.

"A more favorable assessment of the current job market and business conditions contributed to the improvement in consumers' view of the present situation," said Lynn Franco, director of economic indicators at the Conference Board. "Looking ahead, consumers have regained confidence in the short-term outlook for the economy and labor market, and are more optimistic about their future earnings potential."

At the moment, Americans' view of business conditions are mixed, with increases in both the number saying the business environment is currently good and those saying conditions are bad. On the jobs front, attitudes are slightly more positive: The share of consumers saying jobs are plentiful ticked up to 16.5 percent, while those saying jobs are hard to get fell marginally to 29.1 percent.

For the months ahead, 16.8 percent of respondents anticipate the economy will add more jobs, up from 16 percent in September. Nearly 14 percent expect fewer jobs compared to almost 17 percent in the last survey.

Also promising: 17.7 percent of consumers expect their incomes to rise, up from 16.9 percent, while fewer expect their incomes to fall.

While this month's rebound in sentiment is a promising sign, economists Mark Vitner and Michael Wolf at Wells Fargo cautioned not to read too much into the increase, pointing out that few Americans are making plans for major purchases anytime soon.

"The share of consumers planning to buy a home held steady at 5.1 percent, which is lower than the 5.5 percent reported a year ago," they said in a note. "Plans to buy a car or a home should be somewhat sensitive to interest rates, which fell over the survey period and made headlines as banks saw a rise in inquiries regarding refinancing.

"Given the drop in rates, the relative weakness in these two indicators does not spell a strong rebound for either sector in the months ahead."