Simultaneous increases in August and September followed three consecutive monthly declines.
WASHINGTON — American consumers have become more confident for the second month in a row gas prices continued to fall.
On Tuesday, the Conference Board reported that its consumer confidence index rose to 108 in September from 103.6 in August. The simultaneous monthly increase followed three straight monthly declines as US households were hit by rising prices, particularly for gasoline.
The business research group’s current situation index, which measures consumers’ assessment of current business and labor market conditions, also rose again to 149.6 in September from 145.3 in August.
The council’s expectations index — a measure of consumers’ six-month outlook for income, business and working conditions — rose to 80.3 in September from 75.8 in August.
Analysts polled by data provider FactSet expected consumer confidence to rise slightly as gasoline prices fell more than $5 a gallon from their highs this summer. The AAA Auto Club reports that the average price for a gallon of gasoline in the United States fell to $3.75 on Tuesday.
While inflation appears to have slowed recently by some measures, the cost of most things is still much higher than it was a year ago.
The government announced this earlier this month Compared to last year, consumer prices rose by 8.3%. and 0.1% by July. But the jump in “core” prices, which exclude volatile food and energy costs, remains a concern. That beat expectations and raised fears that the Federal Reserve would raise interest rates more aggressively and increase the risk of a recession.
Driven by higher rents, health care and new cars, core prices jumped 6.3% in the year ended August and 0.6% from July to August, the government said earlier this month.
Since March, the Federal Reserve has implemented the fastest pace of rate hikes in decades to try to curb four-decade high inflation that has punished households with sharp increases in spending on food, gas, rent and other essentials.
Last week, the Fed raised its benchmark short-term rate, which affects many consumer and business loans, to a range of 3% to 3.25%, the highest level since early 2008. It was the third consecutive hike by the central bank by three-quarters of a point. and most economists and analysts expect more growth by the end of the year.
Lynn Franco, senior director of economic indicators at the Conference Board, said consumers’ intentions to buy expensive goods are mixed. More people said they plan to buy cars or major appliances soon, but fewer said they plan to buy a home soon as rising interest rates add hundreds of dollars a month to their mortgage payments.
Last week, mortgage buyer Freddie Mac said that average 30-year mortgage rate rises to 6.29%the highest level since October 2008, when the housing market collapsed, triggering the Great Recession.
“Looking ahead, improving confidence may bode well for consumer spending in the final months of 2022, but inflation and rising interest rates remain strong headwinds to growth in the near term,” Franco said.
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