Consumer-confidence gain biggest in 17 years

Walkers are reflected in the window of a bookstore Monday in the Harvard Square neighborhood of Cambridge, Mass. U.S. consumer confidence rebounded more quickly in September than most economists had expected.
(AP/Steven Senne)
Walkers are reflected in the window of a bookstore Monday in the Harvard Square neighborhood of Cambridge, Mass. U.S. consumer confidence rebounded more quickly in September than most economists had expected.
(AP/Steven Senne)

Consumer confidence rebounded in September by the most in more than 17 years as Americans grew more upbeat about the outlook for the economy and job market, though sentiment remained below pre-pandemic levels.

The Conference Board's index increased 15.5 points, the most since April 2003, to 101.8 from August's upwardly revised 86.3, according to a report issued Tuesday. The median forecast in a Bloomberg survey of economists called for a reading of 90 in September, and the figure exceeded all estimates.

The big lift in September is a solid 16.1 point jump from the low of 85.7 hit in April as large swaths of the country went into lockdown.

However, that number was riding well above 100 in the months before April and the index hit 132.6 in February before the severity of covid-19 infections became clear.

The group's gauge of current conditions rose 12.7 points to 98.5, while a measure of the short-term outlook jumped 17.4 points to a three-month high. It also shows rising consumer expectations, which strengthened to 104.0, up from 86.6 in August.

"Consumers also expressed greater optimism about their short-term financial prospects, which may help keep spending from slowing further in the months ahead," Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement.

Consumer confidence is closely watched for signals about consumer spending, which accounts for 70% of economic activity in the U.S. And the country is heading into a crucial economic period, the lead-up to the holiday season.

Headed into the final months of the year, an increase in infection rates and the absence of fiscal relief for the millions of unemployed could weigh on confidence and upend what's been a solid recovery in retail sales.

Respondents indicated that they were more likely to make big purchases in the months ahead. The share expecting to buy major appliances rose to a seven-month high of 49% from 44.9%. Those planning to buy cars increased to 11.8% from 10.1%, and more intended to buy homes.

The share of survey respondents who said they expected their incomes to increase rose to a six-month high of 17.5%, though that's down from 22.7% who said so in February before the pandemic. Optimism in general was driven by higher-income individuals, the report showed.

Larger shares also expected more jobs and better business conditions in coming months.

Consumers who said business conditions are currently favorable increased to a five-month high of 18.3% from 16%. The percentage of consumers who said jobs are hard to come by decreased to 20%, the lowest since March, from 23.6%.

Rubeela Farooqi, chief U.S. economist at High Frequency Economics, said the rebound in confidence in September, while still below the high levels seen before the pandemic hit, likely reflected "some optimism about economic and job prospects from an ongoing and fuller reopening of the economy."

Information for this article was contributed by Jarrell Dillard of Bloomberg News and by Martin Crutsinger of The Associated Press.

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