The numbers: Americans remained fairly confident in the economy in October as trade tensions with China died down and stocks rebounded to record highs.
The consumer confidence index edged down to 125.9 from a revised 126.3 in September, the Conference Board said Tuesday.
Economists polled by MarketWatch had forecast a reading of 128.0.
The index of consumer confidence peaked at an 18-year high of 137.9 exactly one year earlier. It’s been up and down every since: up when the U.S. and China appeared closer to a trade deal and down when talks fizzled.
Now the two countries are talking again.
The so-called present situation index rose to 172.3 from 170.6.
“Confidence levels remain high and there are no indications that consumers will curtail their holiday spending,” said Lynn Franco, director of economic indicators at the privately run Conference Board.
Yet an index that looks at expectations six months from now declined to 94.9 from 96.8. Consumers expressed somewhat less optimism about the labor market in light of the recent slowdown in hiring.
The consumer confidence survey measures how Americans view their own financial well-being, job prospects and overall business conditions.
Big picture: A confident consumer means a sound economy, simple as that. Consumer spending accounts for almost 70% of U.S. economic activity.
Although spending slowed down sharply in third quarter, Americans are still spending enough to keep the economy out of recession. Falling interest rates are also doing their part by making homes, autos and other big-ticket items cheaper to purchase.
To keep the economy from backsliding, the Federal Reserve on Wednesday is expected to cut interest rates again. The U.S. and China have also worked to tamp down trade tensions to reduce the angst that’s caused business spending and investment to retrench.
So far the potential impeachment of President Trump has made little dent in consumer confidence.
What they are saying?: “Given the economy now rests firmly on the shoulders of consumer spending, this is good news,” said Robert Frick, corporate economist at Navy Federal Credit Union. Any slight changes in business or job outlooks should not affect consumer behavior to a degree that it will affect the economy.”
Market reaction: The Dow Jones Industrial Average
and S&P 500
increased modestly in Tuesday trades. The S&P set an all-time high the day before.
The 10-year Treasury yield
was unchanged at 1.84%.