Consumer Confidence Rises to 91.7 in October on Cheaper Gasoline

A surprise rebound, with conditions attached

American consumers felt better in October than at any point since early summer. Their spending plans, however, point toward caution. The Conference Board's Consumer Confidence Index rose 7.5 points to 91.7, up from a September reading that was revised slightly upward to 84.2.3 It was the index's first gain in four months, and it beat every forecast in Bloomberg's survey of economists.9 Economists had expected a much weaker figure. TheStreet's consensus tally was 81.0, and Dow Jones put its forecast at 81.721

All five components of the index improved.7 The Present Situation Index, which measures how people view current business and job conditions, rose 8.6 points to 120.4.4 The Expectations Index, which tracks the six-month outlook, climbed 6.9 points to 72.6. That was its first increase after three straight monthly declines.425 The share of respondents who said jobs were "plentiful" reached a six-month high of 26.7%. The share who said jobs were "hard to get" held at 21.4%.7

One point runs through nearly all of the coverage: the improvement had a narrow cause. Fergus McCormick, the Conference Board's senior economist, linked the recovery to retail gasoline prices falling from September to October. He also said confidence remains on a downward trend that has lasted several years.1 Our view is that October was a relief rally driven by energy prices. It does not mark a turn in how households feel about their finances.

Gas prices explain the bounce

The gasoline link is easy to see. AAA put the national average for regular gasoline at about $4.27 a gallon on October 27. That was down from $4.48 a month earlier but still far above the $3.05 drivers paid a year ago.25 Diesel fell about 12 cents to $6.35 a gallon.30

The wider inflation picture explains why fuel matters so much this year. Coverage traces the pressure to the conflict involving Iran that began in late February. The resulting oil shock pushed headline annual inflation to 3.7%, while underlying inflation stayed below 3%.30 Last month the Federal Reserve raised rates for the first time in more than three years, aiming to stop higher energy costs from spreading through the economy.30

Consumers have not shaken off that inflation. Their average 12-month inflation expectation eased in October but stayed high at 5.8%, and respondents still expected interest rates to rise.1 One commentator noted that this expectation is well above the Fed's 3.75%–4.00% policy range. He argued that, from a household's point of view, the real policy rate is negative.26 That is an opinion, but the arithmetic behind it holds up.

Grocery prices: the data and the mood disagree

The October survey shows a clear gap between official grocery inflation and what shoppers say. In written responses, consumers mentioned prices, the cost of food and groceries, and oil and diesel more often than in September.1 Yet federal data show grocery prices are not rising quickly right now. Food-at-home prices dipped 0.1% in September on a seasonally adjusted basis and were 1.8% higher than a year earlier. Overall food inflation slowed to 2.5% year over year from 2.7% in August.41

The gap comes from the level of prices, not the recent rate of increase. Grocery prices are about 28% higher than in September 2020, according to federal figures cited by The Independent. Over that period ground beef is up 67% and coffee 108%.48 Another calculation finds food-at-home prices up 27.6% since January 2021 and restaurant prices up 32.8%.44 USDA still expects beef and veal prices to rise 9.4% in 2026, even as egg prices fall sharply.44 Restaurant meals keep getting more expensive, with food-away-from-home prices up 3.5% over the past year.44

Shoppers are changing their habits in response. In one industry survey, 67% of grocery shoppers said they were extremely or very concerned about costs, and 69% of people who use several stores said they do so to find better prices.45 Separate polling found half of Americans saying they skip meals because of food prices, although that survey was taken in August.48 Halloween showed the same strain. Small candy packs of nine ounces or less rose 24% in dollar sales while every larger size declined.47 A month of slightly lower grocery prices will not reverse six years of increases, and the October write-ins suggest consumers know it.

Retail sales: higher spending, mostly from higher prices

The most recent hard data on spending also looks better at first glance than underneath. September retail and food services sales rose 0.8% to $745.0 billion and were up 6.3% from a year earlier, according to the Census Bureau's advance estimate.12 That beat the 0.3% gain economists expected.17

The details tell a different story. Gas station sales rose 6.4% as pump prices climbed. Excluding gas, retail sales rose only 0.2%.17 Oxford Economics' Michael Pearce said the headline jump came almost entirely from gasoline.17 TD Economics estimated that inflation-adjusted sales grew just 0.1%, and that control-group sales, which feed into GDP, also rose 0.1%.11 The figures are not adjusted for inflation, so part of the gain simply reflects higher prices.19

Some categories were firm. Restaurant and bar spending rose 1.1%, furniture stores gained 1.3%, and electronics and appliance stores rose 0.6%.17 TD said consumer spending was still on pace for 3.6% annualized growth in the third quarter. It also warned of weak real income growth, a falling saving rate, high energy costs and higher interest rates.11 BDO's Natalie Kotlyar said shoppers are relying on savings and promotions to stretch their budgets, and that spending cannot keep outrunning wages forever.17

This is where the confidence report matters. Consumers said they plan to spend less on services and on durable goods over the next six months. McCormick attributed that to high prices wearing down purchasing power.1 Planned durable-goods spending fell in every category, with expected purchases of phones, computers and tablets down more than 1%. Plans to buy cars and homes edged lower.7 Vacation intentions slipped to 43.3% of respondents.4 Taken together, rising confidence and falling purchase plans look like a warning sign.

Subscriptions are getting harder to cut

One line in the report stands out. Among the top five services where consumers expect to spend over the next six months is the combined category of streaming, internet and mobile services. It sits alongside restaurants, utilities, health care and personal care.7 Some of that spending may be growing simply because bills are rising.

Streaming companies have raised prices repeatedly this year. One tracker counted 23 increases across 10 services by October, against a single price cut.34 Netflix raised all three plans in March, so Standard now costs $19.99 and Premium $26.99.37 Disney+ and Hulu raised their ad-free plans from $18.99 to $21.49 in September.34 Peacock, Apple TV, ESPN, Paramount+ and YouTube Premium also raised prices.3134 One analysis found that six major ad-free plans now cost $108.94 a month combined, 76% more than in January 2022.32 A CNET survey, as summarized by one outlet, put the average subscriber's monthly spending on subscriptions at $111.33

Subscriptions show up in the survey as planned spending, but in practice many households keep paying out of habit. Each increase also reduces what is left for the discretionary purchases retailers need in the holiday season.

Where the coverage diverges

The sharpest disagreement concerns which survey to trust. The University of Michigan's sentiment index, released the week before, fell to a five-month low as high prices and rising rates weighed on morale.23 The two measures focus on different things. The Conference Board's index leans toward the job market, while Michigan's weighs personal finances and inflation more heavily.1 October suggests employment is supporting confidence while prices are dragging it down.

Analysts also disagree on how much the headline number matters. Some point out that sentiment has been a weak guide to actual spending, which has held up and continues to drive growth.23 Others focus on the Expectations Index, which remains below the 80 level the Conference Board has long linked to recession risk and has been under that line since February 2025.1 TheStreet noted that the index has spent long stretches below 80 since the pandemic without a recession following.7 That caveat makes the threshold a weaker signal.

The distribution of the gain also matters. On a six-month average, confidence rose only among consumers under 35 and households earning $100,000 or more.4 October readings improved across political affiliations, most of all among Republicans, a week before the midterm elections.23 Coverage also differs on how weak September was. Some reports describe it as the lowest reading since April 2014, though that description appears to rely on the unrevised figure.294

The takeaway

Our reading is that the economy has not turned and household morale remains fragile. A drop of about 20 cents in gasoline prices lifted confidence. A rise of similar size could reverse it. Consumers expect nearly 6% inflation, pay far more for food than they did in 2020, and face streaming bills that keep rising. They are also telling surveyors they intend to buy less. The next tests are October retail sales, due November 17, and the Conference Board's November reading, due November 24.194 Those releases will show whether this bounce holds up in actual spending.