By Yinmeng Liu
Consumers’ confidence soared past economists’ expectations in October to a seven-year high, a sign that consumers have regained confidence amid solid job gains and falling prices at the gas pump. The positive consumer outlook might pave the way for strong holiday sales and further expansion in the months ahead, some experts said.
Consumer confidence for October rose 5.5 points to 94.5 from 89.0 in September, according to the Conference Board, an industry group that conducted the survey. The latest reading is the highest since October of 2007 and far surpassed the economists’ forecast of 87, according to Bloomberg.
William Lynch, director of investments at Hinsdale Associates Inc., said the improvement of the job market, dips in jobless claims and the unemployment rate all contributed to the surge in consumer optimism.
“Consumers see that in a lot of spaces, they are paying less for gas,” Lynch said, “leaving more room to pay for discretionary expenses. The low oil price is a major tailwind for consumers. It’s a good sign for retailers in the holiday season.”
The unemployment rate for September fell to 5.9 percent from 6.1 percent in August. The four-week moving average of jobless claims, a tally of those who are receiving unemployment insurance benefits, stood at 281,000 in the week ended Oct. 18, the lowest level since 2000.
The Conference Board said its present situation index inched up to 93.7 from 93.0. The expectations index, in the meantime, leaped 8.6 points to 95.0 from 86.4 in September.
“Looking ahead, consumers have regained confidence in the short-term outlook for the economy and labor market, and are more optimistic about their future earnings potential,” said Sara Lynn Franco, the director of economic indicators at the Conference Board.
It remains to be seen whether the jump in consumer confidence will translate to the expected increase in retail sales.
Avis Behling, a store manager at Affordable Portables, a furniture store in Evanston, said sales have been sluggish in the past two weeks and she hasn’t seen any rebounds yet.
“My suppliers have been talking about how things have been slow nationwide,” Behling said. “September was disappointing in sales, and October was similar.”