Consumer confidence rebounds in September
Consumer confidence staged a major comeback in September, rising 15.5 points in The Conference Board’s monthly index to reach 101.8.
That is the highest figure since the COVID-19 pandemic took hold in March, but still significantly below February’s reading of 132.6.
“Consumer Confidence increased sharply in September, after back-to-back monthly declines, but remains below pre-pandemic levels,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a statement.
The latest figure, released Tuesday, was the first time consumer confidence bounded above the 100 mark in six months. It has been hovering largely in the mid-80s, though a brief spike in June brought it to 98.3.
Because consumer spending accounts for about two-thirds of the U.S. economy, consumers’ faith in economic conditions and their willingness to spend is a key indicator of economic health.
“A more favorable view of current business and labor market conditions, coupled with renewed optimism about the short-term outlook, helped spur this month’s rebound in confidence,” Franco said.
“Consumers also expressed greater optimism about their short-term financial prospects, which may help keep spending from slowing further in the months ahead,” she added.
The uptick in confidence comes as COVID-19 cases declined from severe summer outbreaks, though the number of new cases remains elevated well above spring levels and is showing signs of ticking up again as colder weather sets in.
It may also quell concerns about lapsed federal aid, which cut off additional unemployment benefits and small-business protections at the end of July. Congress has failed to agree on a new relief package to extend the benefits.
Some economists warn, however, that average economic data may miss an important trend, called a “K-shaped” recovery, in which the wealthy recover quickly and the poor remain worse off, diverging like the lines of the letter K.