With the election a few weeks away, politics is finally having an impact on consumer confidence.
Consumer confidence fell in October, after back-to-back monthly gains. An IHS Global Insight report noted that “political uncertainty is the major culprit.”
The Conference Board’s Consumer Confidence Index is at 98.6, down from 103.5 in September. The latest level represents the lowest for the index since May. Of the two components of the index, the present situation portion was down to 120.6 from 127.9 and the expectations part fell to 83.9 from 87.2.
Lynn Franco, director of economic indicators at The Conference Board, said, “Consumers’ assessment of current business and employment conditions softened, while optimism regarding the short-term outlook retreated somewhat. However, consumers’ expectations regarding their income prospects in the coming months were relatively unchanged. Overall, sentiment is that the economy will continue to expand in the near-term, but at a moderate pace.”
Nielsen conducted the monthly survey for The Conference Board, with Oct. 13 the cutoff date for preliminary results.
At that time, consumers who said jobs are “plentiful” fell to 24.3 percent from 27.6 percent. Looking ahead, the number of those who said they expect more jobs six months out was down to 13.1 percent from 15.7 percent.
Chris G. Christopher Jr., IHS Global Insight’s economist, said the declines were “due to heightened levels of political uncertainty, rising gasoline prices and a lackluster jobs report.”
He said the hit to consumer confidence was broad-based, with feeling on the current and future business environment becoming more pessimistic.
According to the IHS economist, “This is not a good report, especially as we are entering the most important shopping season of the year. Going forward, we expect consumer confidence to gain some lost ground after the presidential election. This will be good news for many retailers, since higher levels of confidence assist in promoting consumer spending.”
Separately, Christopher said holiday retail sales could rise to 3.7 percent above last year, an improvement over 2015, when they were up 3.2 percent, but weaker than 2014, when they were up 4.8 percent. He said 2016 holiday retail sales could be around $656.1 billion.