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Tuesday, September 30, 2014

Consumer Confidence Reverses Course

Consumer confidence has suddenly reversed course, falling to 86.0 from August's revised recovery high of 93.4. The September reading is well below the Econoday consensus forecast for 92.5 and well below the low end estimate of 90.0.

Weakness is centered in the expectations component as confidence in the economic outlook and in the jobs outlook fell. And there is also weakness in the current conditions component as fewer consumers describe current job openings as plentiful, at 15.1 percent vs August's 17.6 percent. But the jobs-hard-to-get reading, which is closely watched for clues on the monthly employment report, shows only fractional weakness, rising to 30.1 percent from 30.0 percent.

Other readings include sizable dips for auto and home buying plans. And September's weakness isn't due to rising gas prices or rising inflation expectations, the latter dipping 1 tenth to 5.4 percent for the 1-year outlook.

This report had been scaling higher in prior months in contrast to steadier readings in the consumer sentiment report which, in data released on Friday, ended September at a recovery high. Still, both reports, especially today's report, point to easing confidence in current conditions which in turn hints at weakness for the September jobs market.


The Conference Board's consumer confidence index in August was led by strength in the current assessment component. Consumer confidence rose 2.1 points to a new recovery high of 92.4 reflecting a 6.7 point surge in the present situation component to 94.6. The gain in the present situation offset softness in the expectations component which was down 1.0 point to 90.9.

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