Sep 30, 2020 - Economy

Conference Board's surging consumer confidence reading may be an outlier

Data:; Chart: Axios Visuals

The Conference Board's consumer confidence index rose to 101.8 in September from 86.3 in August after two straight monthly declines.

Why it matters: The reading was the largest increase in 17 years, the best reading since March and was nearly 12 points above consensus expectations.

Zoom in: Unlike in previous months when consumers felt confident about the future but nervous about their present situation, all components of the index increased markedly.

  • Consumers’ assessment of current business and labor market conditions rose to 98.5 from 85.8 in August.
  • The index for consumers’ short-term outlook for income, business and labor market conditions increased to 104.0 from 86.6 in August.

Yes, but: The reading diverged sharply from the University of Michigan's consumer sentiment index, which showed confidence largely in line with recent months.

What we're hearing: The vast difference between the two surveys "leaves ongoing uncertainty over the path of consumer spending at a time of rising COVID-19 cases and growing election uncertainty," says ING chief international economist James Knightley.

  • The Conference Board's survey cut off responses Sept. 18 while the latest Michigan survey was released on Sept. 25 and will update on Friday.
  • The Conference Board polls up to 10 times the number of people, Knightley notes.
  • "The other major difference is the perception that the Conference Board measure puts more emphasis on the state of the jobs market while the University of Michigan puts more weight on personal finances and overall business conditions."

Of note: A report from research firm Morning Consult, which surveys respondents daily and has readings through Tuesday, "shows that the momentum from early September has subdued, as growth slowed in the second half of the month."

  • Morning Consult’s reading was 91.8 as of Sept. 29, up 2.2% from Aug. 31, after seeing a 5.2% peak growth rate on Sept. 10.
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