September consumer confidence climbed to 45.4. Economists were expecting 46.5. The August reading was revised up to 45.2, from 44.5.
The Present Situation Index fell to 32.5 from 34.3.
On the bright side, the Expectations Index climbed to 54 from 52.4 a month ago.
“The pessimism that shrouded consumers last month has spilled over into September,” said Lynn Franco of the Conference Board. “Consumer expectations, which had plummeted in August, posted a marginal gain. However, consumers expressed greater concern about their expected earnings, a sign that does not bode well for spending. In addition, consumers’ assessment of current conditions declined for the fifth consecutive month, a sign that the economic environment remains weak.”
Stocks remain near their highs of the day.
Consumer confidence is a key indicator of the economy as consumer spending accounts for around 70% of GDP.
However, there has been a growing debate on the usefulness of confidence as an indicator. As a soft measure, it does not necessarily capture what the consumer will actually do, which appears in hard data like the spending numbers. In other words, you may be worried about your job and the economy, but you might charge an iPad on your credit card anyway.
While confidence has trended lower in recent months, the hard consumer spending data has remained relatively resilient.
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