The consumer confidence Americans rose unexpectedly in October as concerns about high inflation were offset by better prospects for the labor market, suggesting a rebound in economic growth after a turbulent third quarter.
The Conference Board poll on Tuesday showed strong interest in buying homes and expensive items like motor vehicles and appliances in the next six months. The proportion of Americans who plan to leave holidays It is the largest since February 2020, just before the nation was hit by the first wave of Covid-19.
Summer coronavirus infections, driven by the Delta variant, and pandemic-related supply chain constraints restricted economic activity last quarter.
“Consumers are more optimistic after a difficult third quarter and that calls for a strong end to the economy in 2021,” said Christopher Rupkey, economist at FWDBONDS. “Consumers know that tight working market supports them. Those who anticipate a recession due to falling confidence in late summer will have to backtrack. “
The Conference Board held that its index of consumer confidence it rose to 113.8 this month from 109.8 in September, ending three consecutive monthly declines.
The measure, which puts more emphasis on the labor market, remains below its high of 128.9 in June. The increase contrasts with the University of Michigan consumer survey, which showed confidence slumped earlier this month.
Economists polled by Reuters had predicted that the index would drop to 108.3. The Conference Board’s so-called labor market differential, derived from data on respondents’ opinions about whether jobs are plentiful or hard to come by, advanced to a reading of 45 this month, the highest in 21 years, from 43.5. in September.
Expectations of inflation of consumers for the next 12 months jumped to 7.0%, a 13-year high, from 6.5% last month. Despite perceptions of high inflation, there were plans to raise spending, with motor vehicle purchase intentions picking up from a nine-month low.
Also, more people intended to buy home appliances such as washers, televisions and refrigerators for the next six months, suggesting that spending would regain strength after an apparent sharp slowdown last quarter.
Consumer spending this quarter is also likely to be driven by higher demand for travel. The percentage of consumers who say they plan to take a vacation in the next six months increased to 47.6%. That was the highest number since the pandemic began, rising from 42.3% in September.
There was also good news in the housing market. A Commerce Department report on Tuesday showed new single-family home sales rose 14.0% to a seasonally adjusted annual rate of 800,000 units in September, the highest level in six months.
The Conference Board survey showed that consumers are more inclined to buy a house for the next six months. The housing market could be driven by a moderation in house price inflation.
A third report released Tuesday showed that the national index of house prices S&P CoreLogic Case-Shiller increased 19.8% in August from a year earlier after a similar gain in July. Its home price index for 20 metropolitan areas rose 19.7% year-on-year after a record high of 20% in July.
Signs that the rise in home prices has peaked were evident in a fourth report from the Federal Housing Finance Agency that showed that house prices rose 18.5% in the 12 months to August afterward. from rising a record 19.2% in July.
“The slowdown in home prices suggests that buyer fatigue is taking hold, particularly among higher-priced homes, where the acceleration in price growth from the previous month has been greater compared to lower-priced homes. level, “said Selma Hepp, deputy chief economist at CoreLogic.