Rebound in Confidence May be Witch-ful Thinking

Source: Economics Group of Wells Fargo Bank, N.A. Summary Consumers remain downbeat on the economy and its prospects. Confidence slipped for the third straight month and recent events suggest a rebound isn’t in the offing. It’s a Spooky One Consumers continue to lack confidence in the economy amid still-elevated inflation, dwindling income expectations and some initial signs of labor market moderation. The overall consumer confidence index fell to 102.6 in October from an upwardly revised 104.3 in September (chart). This labor market-focused sentiment indicator has now declined for three consecutive months. While the overall jobs market remains extremely tight, some signs of softening may be beginning to weigh on consumers’ moods. Continuing claims for unemployment insurance recently rose off summer lows, and recent data from the BEA show real disposable income has now declined for four straight months through September. Spending has not moved in lockstep with confidence, but we continue to anticipate the trajectory of consumption hinges on the state of the labor market. Until households are overly worried about their job position or prospects, we expect they will continue to spend, making confidence and households’ labor market perceptions integral to the outlook. READ FULL ARTICLE >>