Consumer Confidence Drops More Than Expected

A decline in the assessment of the current jobs market pulled down the consumer confidence index to a lower-than-expected 97.6 in October. This is about 2.4 points below Econoday's low-end forecast and 5.0 points below a revised September.

Consumers are saying there are fewer jobs available then there were in September and more say jobs are hard to get. But the latter reading, at 25.8 percent, is still low and consistent with low rates of unemployment. Still, these readings are weaker than September and helped pull down the present situation component by a sizable 8.2 points to 112.1.

The six-month outlook shows much less monthly weakness compared to September with the component down 2.8 points to 88.0. Buying plans are mixed with cars down but both houses and appliances up. Inflation expectations are steady at 5.1 percent which is moderate for this reading.

Jobs are at the heart of consumer confidence and today's report will limit expectations for strength in the October employment report. This report may also limit expectations for retail sales in October including, based on buying plans, sales of vehicles.

Recent History Of This Indicator:
Despite expectations for a pull back, the consumer confidence index has been posting a series of very strong readings that have been immune to troubles in foreign demand or global financial markets. Job readings have been unusually strong in this report but have yet to be confirmed by strength in government job data. The Econoday consensus for October is calling for only a 1/2 point decline to a still very positive 102.5.