US consumers gain confidence as gas prices continue to fall

WASHINGTON — American consumers increased their confidence for the second month in a row as gasoline prices continued to fall.

The Conference Board said Tuesday that its consumer confidence index rose to 108 in September from 103.6 in August. The consecutive monthly increases follow three consecutive monthly declines, as US households took a hit from rising prices, particularly at gas stations.

The business research group’s Current Situation Index, which measures consumers’ assessment of current business and working conditions, also rose again, to 149.6 in September from 145.3 in August.

The board’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 had expected consumer confidence to rise slightly as gasoline prices have fallen from this summer’s highs of more than $5 a gallon. AAA motor club says the average price of a gallon of gasoline in the US fell to $3.75 on Tuesday.

Although by some measures inflation appears to have slowed recently, the cost of most things is still significantly higher than it was a year ago.

Earlier this month, the government reported that consumer prices increased 8.3% from a year ago and 0.1% from July. But the jump in “core” prices, which exclude volatile food and energy costs, remains worrying. It beat expectations and fueled fears that the Federal Reserve will raise interest rates more aggressively and increase the risk of a recession.

Buoyed by high rents, health care and new cars, basic prices rose 6.3% in the year to August and 0.6% between July and August, the government reported earlier this year. month.

Since March, the Federal Reserve has implemented its fastest pace of rate hikes in decades to try to curb four-decade high inflation, which has punished households with skyrocketing costs for food, gasoline, rent and other necessities.

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 increase consecutive three-quarter point central bank. and most economists and analysts expect more increases before the end of the year.

Lynn Franco, senior director of economic indicators at the Conference Board, said consumers’ buying intentions for big-ticket items were mixed. More people said they expected to buy cars or major appliances in the near future, but fewer said they intended to buy a home anytime soon, as rising interest rates have added hundreds of dollars a month to payments. of the mortgage.

Last week, mortgage buyer Freddie Mac said the average rate on a 30-year mortgage rose to 6.29%, the highest level since October 2008, when the housing market crashed and triggered the Great Recession.

Looking ahead, improving confidence may bode well for consumer spending in the final months of 2022, but inflation and interest rate hikes remain strong headwinds to near-term growth. Franco said.

Source link

Leave a Reply

Your email address will not be published.