Americans felt better about the economy in October, but their plans for major purchases stayed cautious. The Conference Board's October 27 release shows how a rebound in confidence can coexist with pressure on household budgets.
What the rebound measures
The headline index rose 7.5 points to 91.7 from September's revised 84.2. The two components measure different questions:
| Index | October reading | Monthly change |
|---|---|---|
| Present Situation | 120.4 | Up 8.6 points |
| Expectations | 72.6 | Up 6.9 points |
Present Situation covers current business and employment conditions. Expectations covers business, jobs and family income six months ahead. Both improved; the forward-looking component recovered only part of its decline over the previous three months.
The survey's technical note explains that the headline combines five questions: two about current conditions and three about expectations. Responses are converted into indexes benchmarked to 1985.
A reading of 91.7 therefore does not mean 91.7% of Americans are confident. Nor does a 7.5-point increase mean households have 7.5% more income or purchasing power.
Revisions also affect the comparison. Reuters reported that September had initially been reported at 81.9 and economists had expected October to reach 81. Comparing 91.7 with the old September figure would suggest a 9.8-point jump. The comparable revised figures show the smaller 7.5-point gain.
The methodology uses responses received after the preliminary cutoff to produce final monthly estimates published with the following month's data. The October preliminary survey covers responses collected October 1 to 21, before the final week of the month.
A little relief can leave prices high
Conference Board economist Fergus McCormick linked the improvement to gasoline prices easing between September and October.
The Bureau of Labor Statistics' September CPI report, released October 14, recorded gasoline prices rising 9.1% that month. Gasoline accounted for more than half the overall monthly price increase.
September's broader inflation figures show why affordability concerns persist:
- Consumer prices rose 0.6% from August, seasonally adjusted.
- Prices were 3.7% higher than a year earlier.
- Food prices were unchanged for the month but 2.5% higher over the year.
Monthly relief in one expense can coexist with a higher annual cost of living. The food figures illustrate the difference: an unchanged monthly index means prices stopped increasing for that month, while the annual comparison still shows a more expensive basket.
CPI measures average price changes across a broad basket. A household's own bills depend on what it buys. The September price report and the October confidence survey also cover different periods, so the confidence rebound does not establish that October inflation fell.
Better sentiment is not a spending tally
The Conference Board found slightly weaker home and auto purchase plans on a six-month moving average. Intended spending on durable goods also declined, while service-spending plans were generally lower apart from movies, theater, live entertainment and sporting events.
Those are intentions, not completed purchases. They give retailers and service businesses a reason to distinguish a more positive outlook from orders already placed.
The improvement also varied across households. Scotsman Guide's Ryan Kingsley reported that, on a six-month moving average, confidence increased only among consumers under 35 and households earning at least $100,000. Those are separate age and income breakdowns, not a finding limited to young, high-income people.
The employment data provide another check on the mood. BLS reported September payroll growth of 29,000 and an unemployment rate of 4.2%, describing both as little changed. Average hourly earnings for private-sector workers rose 3% over the year, below the 3.7% increase in consumer prices.
BLS also revised July and August payrolls down by a combined 60,000, showing that the earlier hiring picture was weaker than first reported.
Those national averages do not establish any individual worker's pay change. They do show why an improved confidence reading can sit alongside continued strain on purchasing power. The next BLS employment report, covering October, is scheduled for November 6 at 8:30 a.m. ET.
