A cloud of uncertainty hung over the U.S. economy in the month leading up to the presidential election—and still does to a large extent now that the election has been decided.
Consumer expectations of their finances and the economy largely remained stable in the month of October despite the uncertainty, according to the October 2016 Survey of Consumer Expectations (SCE) released by the New York Fed this week.
The notable exception was seen in expectations for household spending growth, which experienced a sharp dropoff from September to October (from 3.7 percent down to 3.2 percent).
“This series has been volatile, but the current reading is below the average since the beginning of the year of 3.5 percent,” the report stated. “The decrease was driven primarily by older and lower educated respondents.”
Median home price expectations stayed flat from September to October at 3.2 percent; over the last 12 months, that number has stayed within the narrow 3.0 to 3.3 percent range. The share of respondents in the Northeast expecting home price increases in the next 12 months rose sharply from 2.3 percent up to 3.0 percent, but declined in the West from 4.0 to 3.4 percent, according to the New York Fed.
Perceived conditions of the labor market improved somewhat in October. Survey respondents who expected personal income growth in the next year increased slightly from 2.0 to 2.1 percent but remained slightly below the series average of 2.3 percent. The perceived probability of losing one’s job in the next 12 months fell slightly over-the-month in October from 16.3 percent down to 14 percent, close to its level at the beginning of the year—a broad-based decrease across all age, education, and income groups, the New York Fed reported. The mean probability of leaving one’s job voluntarily also fell slightly in October, from 22.8 percent down to 22.3 percent.
In October, perceived change in credit availability compared with a year ago and for the year ahead both declined slightly, according to the New York Fed.
The Conference Board reported in October that consumer confidence was down slightly. The Board's index (1985=100) fell from 103.5 in September down to 98.6 in October.
“Consumer confidence retreated in October, after back-to-back monthly gains,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current business and employment conditions softened, while optimism regarding the short-term outlook retreated somewhat. However, consumers’ expectations regarding their income prospects in the coming months were relatively unchanged. Overall, sentiment is that the economy will continue to expand in the near-term, but at a moderate pace.”