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WASHINGTON — Concerned about rising inflation, U.S. consumers had a strong decline in their perceptions about the economy and their own financial prospects in the month of October as reported by the Conference Board’s Consumer Confidence Index.
In addition, the Bureau warned that fears of inflation may make this a challenging holiday retail season, with deep discounts needed to offload inventory a possibility.
Consumer confidence decreased in October to 102.5 (1985=100), down from 107.8 in September. The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — fell sharply to 138.9 from 150.2 last month. The Expectations Index — based on consumers’ short-term outlook for income, business and labor market conditions — declined as well to 78.1 from 79.5.
“The Present Situation Index fell sharply, suggesting economic growth slowed to start Q4,” said Lynn Franco, senior director of economic indicators at The Conference Board. “Consumers’ expectations regarding the short-term outlook remained dismal. The Expectations Index is still lingering below a reading of 80 — a level associated with recession — suggesting recession risks appear to be rising.”
Consumer concern about inflation is growing as food and gas prices continue to climb and vacation plans are slowing. The survey showed that intentions to purchase a homes, automobiles and big-ticket appliances all rose in October.
“Looking ahead, inflationary pressures will continue to pose strong headwinds to consumer confidence and spending, which could result in a challenging holiday season for retailers,” Franco said. “And, given inventories are already in place, if demand falls short, it may result in steep discounting which would reduce retailers’ profit margins.