Consumer Confidence Jumps to 91.7 in October as Gas Prices Ease: What the Survey Says About Jobs, Prices and Your Budget

Americans felt better about the economy in October for the first time in four months, but the same survey shows most households still bracing for higher prices.

How much did consumer confidence rise in October?

The Conference Board's Consumer Confidence Index rose 7.5 points to 91.7 in October, up from a revised 84.2 in September, the group said on Tuesday, Oct. 27. It was the first increase in four months, and the survey's economist tied the rebound to easing gas prices.

The index is built from a monthly survey that asks people how they feel about business conditions, jobs and their income, both today and six months from now. A reading of 100 equals how people felt in 1985, so 91.7 means confidence is still below that benchmark. The preliminary results were based on responses collected through Oct. 21, according to the Conference Board's release.

September's reading was also revised up, to 84.2 from an earlier 81.9, Yahoo Finance reported. That earlier September figure was the weak reading behind our story on confidence falling to its lowest level since 2014.

What drove the rebound?

Both halves of the index improved. The Present Situation Index, which measures how people rate business conditions and the job market right now, rose 8.6 points to 120.4. The Expectations Index, which tracks the six-month outlook for business, jobs and income, climbed 6.9 points to 72.6 after three straight monthly declines.

Gas prices appear to be a big part of the story. "The recovery was in line with retail gasoline prices easing from September to October," said Fergus McCormick, senior economist for global indicators at the Conference Board. Regular gasoline averaged about $4.26 a gallon on Tuesday, according to AAA figures cited by Yahoo Finance, roughly 22 cents less than a month earlier. Diesel was down about 12 cents over the month but still nearly $2.70 more expensive than a year ago. We covered the recent slide at the pump in our look at gas and diesel prices.

McCormick also put the jump in context. "Consumer confidence remained on the long-term downward trend that's persisted over the past few years," he said. In other words, one good month doesn't erase a longer slide.

What does the survey say about jobs and income?

The job market looked a little better to respondents. The share saying jobs are "plentiful" rose to 26.7% from 24.3%, while the share saying jobs are "hard to get" held at 21.4%. The gap between those two numbers, which economists call the labor differential, widened 2.4 points to +5.3. A wider gap usually means people see more openings than closings around them.

Income expectations improved too. In October, 18.7% of consumers expected their household income to rise over the next six months, up from 18.1%, and 12.0% expected it to fall, down from 14.9%. That pushed the net reading up 3.5 points to +6.7.

Still, worries haven't gone away. When people wrote in what was on their minds, rising costs led the list, especially groceries, food, and oil and diesel prices. Mentions of jobs and employment ticked up slightly. "Somewhat likely" was the most common answer when people were asked about the chances of a recession in the next 12 months.

Are people planning to spend more?

Not really. Plans to buy cars and homes both edged down, based on a six-month moving average, and planned spending on big-ticket items such as phones, laptops and tablets fell. Vacation plans slipped as well: 43.3% said they plan a vacation in the next six months, down from a revised 44.2% in September, with more people planning domestic trips and fewer planning foreign ones.

That gap between better feelings and cautious plans matters. Consumer spending drives most of the U.S. economy, so economists watch whether improved moods turn into actual purchases. For now, the survey suggests households feel a bit relieved but are still careful with big purchases.

What this means for your wallet

The most useful number in this report for your budget may be one that didn't make headlines: consumers expect prices to rise 5.8% over the next 12 months. That figure is down from September but still high. Here's a simple way to think about it. If your household spends $1,000 a month on groceries, gas and other everyday items, a 5.8% increase would add about $58 a month, or roughly $696 over a year. Expectations aren't a forecast you can count on, but they can be a helpful stress test for your spending plan.

Here are a few ways people use a report like this:

• Pocket the gas savings on purpose. If you buy about 50 gallons a month, a 22-cent drop saves around $11. Moving that $11 into savings each month keeps it from disappearing into other spending.
• Add a cushion for rising costs. Some households pad their grocery and gas lines by a few percent so a price jump doesn't break the budget.
• Keep building an emergency fund. With recession worries still common in the survey, a cash buffer can give you options if your hours or job change. Our guide to building your first $10,000 emergency fund breaks it into steps.

Confidence surveys measure feelings, not your bank balance. A better mood nationally doesn't change your own numbers, so it can help to check your spending against your plan each month rather than reacting to headlines.