Consumer confidence hit its highest level in nine years, right about when the last recession began, according to the Consumer Confidence Survey conducted by The Conference Board by Nielsen, a provider of information and analytics around what consumers buy and watch.
Consumer confidence increased in September to 104.1, up from 101.8 in August. The Present Situation Index increased from 125.3 to 128.5 and the Expectations Index both increased from 86.1 to 87.8.
In 1985, the index was set to 100, representing the index's benchmark. This value is adjusted monthly based on results of a household survey of consumers' opinions on current conditions and future economic expectations. Opinions on current conditions make up 40% of the index, while expectations of future conditions make up 60%.
“Consumer confidence increased in September for a second consecutive month and is now at its highest level since the recession,” said Lynn Franco, The Conference Board director of economic indicators. “Consumers’ assessment of present-day conditions improved, primarily the result of a more positive view of the labor market.”
“Looking ahead, consumers are more upbeat about the short-term employment outlook, but somewhat neutral about business conditions and income prospects,” Franco said. “Overall, consumers continue to rate current conditions favorably and foresee moderate economic expansion in the months ahead.”
Consumers assessment of current conditions improved in September. Those that said business conditions are good, however, decreased from 30.3% to 27.4%, but those saying conditions are bad also declined from 18.2% to 16.2%.
Those who said jobs are plentiful increased from 26.8% to 27.9% and those who said jobs are hard to get decreased from 22.8% to 21.6%.
Americans were also more confident about the short-term outlook in September. While those who expected business conditions to improve over the next six months decreased from 17.6% to 16.5%, but those expecting conditions to get worse also declined from 11.4% to 10.2%.
More consumers expect the labor market to improve in the next six months. Those who said jobs will increase went up from 14.4% to 15.1% in September. In addition, those who expect there to be fewer jobs declined from 17.5% to 17%. Those who expect their incomes may have decreased from 18.5% to 17.1%, but they are not expecting a demotion either. Those who expect a decline in pay decreased from 11% to 10.3%.
“The rise in the present situation index appears to reflect an improvement in labor market conditions,” Capital Economics Chief Economist Paul Ashworth said. “The net proportion of respondents saying that jobs were plentiful rather than hard to get improved to a nine-year high.”
“But that doesn’t necessarily mean that faster wage growth is coming soon,” Ashworth said. “Overall, a lot better than expected, but confidence hasn’t been a great guide to actual consumer spending in recent years.”
However, household income posted its first significant increase in eight years, new data from the U.S. Census Bureau showed.