As petrol prices fall, US consumers more confident

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More people planned to buy cars, large appliances, but fewer people were willing to buy houses as interest rates rose.

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Consumers in the US have become more confident for the second month in a row as gasoline prices continue to fall.

The Conference Board said Tuesday that its consumer confidence index rose to 108 in September from 103.6 in August. The continuous monthly increase followed three consecutive monthly declines as US households were hit by rising prices, especially at the gas station.

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The Business Research Group’s Current Situation Index, which measures consumers’ assessment of current business and labor market conditions, also rose again to 149.6 in September from 145.3 in August.

The Board Expectations Index – a measure of the six-month outlook for earnings, business and consumer working conditions – rose to 80.3 in September from 75.8 in August.

Analysts polled by data provider FactSet had expected consumer confidence to pick up slightly as gasoline prices fell from a mid-year high of over $5 a gallon ($1.30 a litre). The AAA Automobile Club reports that the average price per gallon of U.S. gasoline fell to $3.75 ($0.99 per liter) on Tuesday.

Although by some measures inflation seems to have slowed down recently, the cost of most things is still significantly higher than a year ago.

Earlier this month, the government reported that consumer prices rose 8.3% from a year ago and 0.1% from July. But the jump in “base” prices, which exclude volatile food and energy prices, remained a concern. This beat expectations and raised concerns that the Federal Reserve would raise interest rates more aggressively and raise the risk of a recession.

The government reported earlier this month that thanks to high rents, medical care and new cars, base prices jumped 6.3% in the year ended August and 0.6% from July to August.

Since March, the Federal Reserve has implemented the fastest pace of rate hikes in decades to try to curb high inflation that has penalized households with high spending on food, gasoline, rent and other necessities.

Last week, the Fed raised its base short-term rate, which affects many consumer and business loans, to a range of 3 percent to 3.25 percent, the highest level since early 2008. growth, and most economists and analysts expected a further increase before the end of the year.

Lynn Franco, senior director of economics at the Conference Board, said consumers’ intentions to buy expensive items were mixed. More people said they expected to buy cars or large appliances in the near future, but fewer said they intended to buy a house soon as rising interest rates increased monthly mortgage payments by hundreds of dollars.

Mortgage buyer Freddie Mac said last week that the average 30-year mortgage rate rose to 6.29 percent, the highest level since October 2008, when the housing market collapsed, triggering the Great Recession.

“Looking ahead, improved confidence may bode well for consumer spending in the final months of 2022, but inflation and rising interest rates remain strong short-term growth impediments,” Franco said.

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