ALEXANDRIA, Va.—Consumers are feeling more confident about the economy, after three months of declining consumer sentiment, according to the Conference Board, reports U.S. News & World Report. The overall index rose four points to 113.8, up from a revised 109.8 in September and above consensus estimates of 108.5.
The Present Situation Index, which is consumers' assessment of current business and labor market conditions, rose to 147.4 from 144.3 last month. The Expectations Index, or consumers' short-term outlook for income, business and labor market conditions, improved to 91.3 from 86.7.
"Consumer confidence improved in October, reversing a three-month downward trend as concerns about the spread of the Delta variant eased," said Lynn Franco, senior director of economic indicators at the board. She also said that the proportion of consumers planning to purchase homes, automobiles and major appliances increased in October. This is a sign that consumer spending will continue to support economic growth through the rest of 2021.
According to Lynn Franco, senior director of economic indicators at the board, the proportion of consumers planning to purchase homes, automobiles and major appliances increased in October. She said this is a sign that consumer spending will continue to support economic growth through the rest of 2021.
“Likewise, nearly half of respondents (47.6%) said they intend to take a vacation within the next six months—the highest level since February 2020, a reflection of the ongoing resurgence in consumers' willingness to travel and spend on in-person services," said Franco.
The positive report comes as the economy enters the holiday retail season with Americans planning to spend close to what they did in 2019, with spending on experiences (including socializing, travel and entertainment) expected to increase 15% over 2020. Among consumers surveyed, 42% plan to take a trip this holiday season, mostly by car. However, higher prices and supply chain issues may dull the holiday shopping experience.
Wells Fargo is forecasting an 11% increase in sales over last year. However, Jonathan Silver, founder and CEO of Affinity Solutions, which tracks 90 million debit and credit card transactions, says he is looking for an increase of 13% in spending for the holiday season over last year.