US consumer confidence rises for second straight month

The consumer confidence index went up nearly five points to 108.0 the second straight month, boosted by rising wages and falling gas prices, according to a survey released on Tuesday by The Conference Board. The result was the highest level since April and far better than the modest improvement economists had expected.

The US Federal ReserveFederal Reserve has been raising borrowing costs aggressively this year, and last week it announced its third consecutive 0.75 percentage point increase in the benchmark interest rate as it tries to cool the world's largest economy to bring down the fastest inflation in 40 years.

The progress has been slow as resilient consumers have continued to spend to support economic activity, despite the fact that they have been slow to make progress. The survey showed expectations of inflation fell for the third month in a row, which is good news for the central bank.

Concerns about inflation dissipated further in September - a largely result of declining prices at the gas pump - and are now at their lowest level since the beginning of the year, said Lynn Franco, senior director of economic indicators at The Conference Board.

The survey showed that respondents felt better about their present situation, as well as expectations for the coming six months, with plans to buy cars and appliances increasing, but more reluctance to invest in a home, which Franco said was reflected by rising mortgage rates and the cooling housing market.

Inflation and interest-rate hikes are strong factors that affect growth in the short term, and the improvement in confidence may bode well for consumer spending in the final months of 2022, according to Franco.

Ian Shepherdson of Pantheon Macroeconomics cautioned that the good feelings might not last as people absorb the hit from the recent drop in stock prices and the Fed's latest rate hikes, with the promise of more to come. He said that the headline index is now just a few points shy of the pre-Ukraine invasion peak and that people's views of both the current and future economy have perked up for now.