American's are Losing Faith in the Economy

The Confidence Board announced that consumer confidence dipped to 102.5 in October from 107 in September. as worries about inflation and prices for essential items have remained elevated.

October saw U.S. consumer confidence dive into worries about rising prices returned with a vengeance after having abated to some degree in recent weeks.

It was revealed on Tuesday by the Conference Board that their consumer confidence index dropped to 102.5 in October, down from 107.8 in September. In the prior two months, consumer confidence had increased as a result of a minor reduction in the rate of increase in petrol prices; this occurred even though prices for other necessities continued to be rather high.

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The present situation index of the business research group, which measures consumers' evaluation of current business and labor market conditions, dropped significantly to 138.9 from 150.2 in September. This indicator evaluates consumers' assessment of current business and labor market conditions.

A measure of consumers' six-month view of income, company, and labor circumstances, the board's expectations index fell to 78.1 from 79.5 the previous month. This indicator is a measure of consumer optimism.

According to Lynn Franco, senior director of economic indicators at the Conference Board, a value for the expectations index lower than 80 indicates a level associated with recession. This level suggests that risk appears to be gathering speed.

The United States government recently reported that inflation accelerated in the month of September, with the cost of housing and other necessities intensifying pressure on families, wiping out pay gains, and virtually guaranteeing that the Federal Reserve will continue raising interest rates aggressively.

In an effort to combat inflation, which has burdened consumers with ever-increasing expenses for food, petrol, rent, and other necessities since March, the Federal Reserve has been increasing interest rates at a faster pace over the last several decades.

Late in September, the Federal Reserve raised its short-term benchmark rate, which influences a large number of consumer and commercial loans, to a range of 3% to 3.25%, which is the highest level since the beginning of 2008. It was the third consecutive quarter-point hike from the central bank, and the vast majority of economists and experts anticipate more increases before the end of the year, including the possibility of another increase of 0.75 percentage points at the Fed meeting the following week.

Franco predicted that inflationary pressures will continue to damper consumers' confidence and spending, "which could result in a tough holiday season for retailers."

The government stated earlier this month that the sales rate at retail establishments in the United States was the same in September as in August. As rents and food costs continued to rise, the amount of money that Americans were prepared to spend in other areas decreased.

Franco observed that consumers' intentions to buy big-ticket items like large appliances and cars rose somewhat this month, despite the overall drop in confidence observed over the same period.

General Motors announced Tuesday that its net profit for the third quarter increased by 36.7% due to strong sales.

Despite increasing borrowing rates and inflation, the company's Chief Financial Officer, Paul Jacobson, stated that the company is not observing any signs that the market for new vehicles is slowing down. He told reporters early on Tuesday that "pricing is high" and that "demand remains strong" for the company's products.

This month, the Conference Board also reported an increase in the number of people who intend to purchase homes. Given that existing house sales have dropped for eight consecutive months and that long-term mortgage rates in the United States have climbed to nearly 7% in the last week, this is a fairly remarkable turn of events.

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                                            Consumer confidence declined in October: Conference Board