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October 15, 2015

Consumer Sentiment Remains Unchanged In October From Previous Month

by Jharonne Martis.

Consumers feel OK with their current state of personal finances and job situation. It also looks like they have been saving for a rainy day. The U.S. personal saving rate is stronger today than in pre-recession years (2002–2007), when retail sales and the economy were booming. However, they are very worried about the ability to continue to do this in the future and are concerned about possible job loss.

The overall Thomson Reuters IPSOS U.S. Primary Consumer Sentiment Index (PCSI) is essentially unchanged for October 2015 as consumer confidence in the U.S. continues to be stuck in neutral.

Consumer confidence is slightly down versus this time last year. It appears now that the peak reached in January 2015 was the top of the rally in consumer confidence since the recession of 2007-2008.

Stability in the overall PCSI is repeated in the component sub indices. In the last month, no index (Current, Expectation, Investment or Jobs) has moved more than 0.4 points.

Consumers are fed up with the lack of positive economic news. They are unsure where the economy really stands, and as a result retail sales have also remained stagnant. For Q3 2015, our Thomson Reuters Quarterly Same Store Sales Index is expected to post 1.6% growth for Q3, also slightly below last year’s 1.7% growth in Q3 2014.

Exhibit 1: US Primary Consumer Sentiment Index (PCSI)
Source: Eikon


The PCSI Current Condition Index is up slightly from last month (to 45 from 44.6), however this is a small change. The improvement results from some small gains in consumer comfort with the state of their personal finances.

Exhibit 2: The PCSI Current Condition Index
Source: Eikon


The PCSI Expectations Index is unchanged from last month. The overall index shows no movement, however the individual indicators show that consumers appear to be somewhat more positive on the future of their personal finances but slightly more negative about their future job security.

Exhibit 3: The PCSI Expectations Index
Source: Eikon


The PCSI Investment Index is also unchanged from last month. Consumers remain concerned about their ability to save and invest.

Exhibit 4: The PCSI Investment Index
Source: Eikon


The PCSI Jobs Index is down slightly from last month (from 65.2 to 64.9), though this is a small decline. This decline is driven primarily by concerns about future job loss rather than any actual experiences with job insecurity.

Exhibit 5: The PCSI Jobs Index
Source: Eikon

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