Conference Board Consumer Confidence Index; October 2022

New York, October 25, 2022…The Conference Board Consumer Confidence Index® decreased in October after back-to-back monthly gains. The Index now stands at 102.5 (1985=100), down from 107.8 in September. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—declined sharply to 138.9 from 150.2 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—declined to 78.1 from 79.5. 

 
“Consumer confidence retreated in October, after advancing in August and September,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index fell sharply, suggesting economic growth slowed to start Q4. Consumers’ expectations regarding the short-term outlook remained dismal. The Expectations Index is still lingering below a reading of 80—a level associated with recession—suggesting recession risks appear to be rising.”

“Notably, concerns about inflation—which had been receding since July—picked up again, with both gas and food prices serving as main drivers. Vacation intentions cooled; however, intentions to purchase homes, automobiles, and big-ticket appliances all rose. Looking ahead, inflationary pressures will continue to pose strong headwinds to consumer confidence and spending, which could result in a challenging holiday season for retailers. And, given inventories are already in place, if demand falls short, it may result in steep discounting which would reduce retailers’ profit margins.”

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National residential construction metrics; 9/22

Building Permits
Privately‐owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,564,000. This is 1.4 percent above the revised August rate of 1,542,000, but is 3.2 percent below the September 2021 rate of
1,615,000. Single‐family authorizations in September were at a rate of 872,000; this is 3.1 percent below the revised August figure of 900,000.

Housing Starts
Privately‐owned housing starts in September were at a seasonally adjusted annual rate of 1,439,000. This is 8.1 percent (±14.9 percent)* below the revised August estimate of 1,566,000 and is 7.7 percent (±11.5 percent)* below the September 2021 rate of 1,559,000. Single‐family housing starts in September were at a rate of 892,000; this is 4.7 percent (±10.7 percent)* below the revised August figure of 936,000. The September rate for units in buildings with five units or more was 530,000.

Housing Completions
Privately‐owned housing completions in September were at a seasonally adjusted annual rate of 1,427,000. This is 6.1 percent (±11.0 percent)* above the revised August estimate of 1,345,000 and is 15.7 percent (±13.1 percent) above the September 2021 rate of 1,233,000. Single‐family housing completions in September were at a rate of 1,049,000; this is 3.2 percent (±8.8 percent)* above the revised August rate of 1,016,000. The September rate for units in buildings with five units or more was 376,000.

Conference Board Leading Economic Index; 9/22

New York, October 20, 2022…The Conference Board Leading Economic Index® (LEI)for theU.S. decreased by 0.4 percent in September 2022 to 115.9 (2016=100), after remaining unchanged in August. The LEI is down 2.8 percent over the six-month period between March and September 2022, a reversal from its 1.4 percent growth over the previous six months.

“The US LEI fell again in September and its persistent downward trajectory in recent months suggests a recession is increasingly likely before yearend,” said Ataman Ozyildirim, Senior Director, Economics, at The Conference Board. “The six-month growth rate of the LEI fell deeper into negative territory in September, and weaknesses among the leading indicators were widespread. Amid high inflation, slowing labor markets, rising interest rates, and tighter credit conditions, The Conference Board forecasts real GDP growth will be 1.5 percent year-over-year in 2022, before slowing further in the first half of next year.”

Conference Board CEO Confidence Index; 3Q/22

The Conference Board Measure of CEO Confidence™ in collaboration with The Business Council stands at 32 to start Q4 2022, down from 34 in Q3. The Measure fell deeper into negative territory, to lows not seen since the depths of the Great Recession. (A reading below 50 points reflects more negative than positive responses.) A total of 136 CEOs participated in the Q4 survey, which was fielded between September 19 and October 3. 

The recent survey asked CEOs to describe the economic conditions they are preparing to face over the next 12-18 months. An overwhelming majority—98%—said they were preparing for a US recession. Moreover, 99% of CEOs said they were preparing for an EU recession.

“CEO confidence sunk further to start Q4 and is at its lowest level since the Great Recession,” said Dana M. Peterson, Chief Economist of The Conference Board. “CEOs’ view of current conditions as well as their expectations deteriorated: only 5% reported business conditions were better today than they were six months ago, and the same proportion—just 5%—expected conditions to improve over the next six months. However, despite expectations of slower growth, tight labor market conditions and wage pressures persist, while hiring plans remained robust.”   

“CEOs are now preparing for near-inevitable recessions in both the US and Europe,” said Roger W. Ferguson, Jr., Vice Chairman of The Business Council and Trustee of The Conference Board. “While the vast majority still expect the US recession to be short and shallow, nearly 7 in 10 believe the EU will enter a deep recession with serious global spillovers. At the same time, CEOs continue to experience inflationary pressures, with 59% reporting input costs over the past three months remained the same or rose with no easing expected by year-end. Moreover, at the start of Q4, only 19% reported an increase in demand over the past three months—down from 38% in in Q3.”

Conference Board commentary on 10/7/22 jobs report.

Today’s jobs report showed moderating job gains, with 263,000 jobs added in September 2022, after an increase of 315,000 jobs in August. While this is still a robust rate of employment growth, it is well below the average of 420,000 added per month so far in 2022. Softer job gains were expected amid a weaking economy, the Federal Reserve’s rapid interest rate hikes, and the recovery most industries have already seen from pandemic-induced job losses. With the number of job openings—an important leading indicator of hiring—already on the decline, September’s softer jobs report is another sign that the labor market is cooling. The pace of hiring is expected to slow further as the end of 2022 approaches.

The unemployment rate fell to 3.5 percent in September 2022, down from 3.7 percent in August. The labor force participation rate ticked down to 62.3 percent, from 62.4 percent in August.

Job gains were visible in most industries. Leisure and hospitality added another 83,000 jobs, with notable gains also seen in health care and social assistance (75,400), professional and business services (46,000), manufacturing (22,000), and construction (19,000). Temporary help services—a leading indicator for hiring—continued to add jobs (27,200), signaling that there may still be potential further, albeit slower, job gains ahead.

The labor market remains very tight with average hourly earnings still elevated at 5 percent growth over the past year. However, there are signs that the labor market is cooling. The number of job openings has fallen 15.2 percent since its peak in March 2022; quits remain high but are also down by 6.5 percent since March 2022. The worst of labor shortages may be behind us for now. Further easing of recruitment and retention difficulties can be expected over the next months if the labor market indeed continues to cool.

At the same time, there are no clear signs yet of increasing layoffs. This could change in 2023 with the growing likelihood that the US will fall into recession. Still, the unemployment rate is currently projected to only rise to about 4.5 percent in 2023, still quite low in historical context. With the recession projected to be short, job losses may be relatively small. Furthermore, companies have had difficulties over the past year attracting and retaining workers and may therefore avoid implementing layoffs. Altogether, this means that labor shortages may ease over the coming year but are unlikely to disappear.

Conference Board Leading Economic Index; August, 2022

New York, September 22, 2022…The Conference Board Leading Economic Index® (LEI)for theU.S. decreased by 0.3 percent in August 2022 to 116.2 (2016=100), after declining by 0.5 percent in July. The LEI fell 2.7 percent over the six-month period between February and August 2022, a reversal from its 1.7 percent growth over the previous six months.

“The US LEI declined for a sixth consecutive month potentially signaling a recession,” Ataman Ozyildirim, Senior Director, Economics, at The Conference Board. “Among the index’s components, only initial unemployment claims and the yield spread contributed positively over the last six months—and the contribution of the yield spread has narrowed recently.”

“Furthermore, labor market strength is expected to continue moderating in the months ahead. Indeed, the average workweek in manufacturing contracted in four of the last six months—a notable sign, as firms reduce hours before reducing their workforce. Economic activity will continue slowing more broadly throughout the US economy and is likely to contract. A major driver of this slowdown has been the Federal Reserve’s rapid tightening of monetary policy to counter inflationary pressures. The Conference Board projects a recession in the coming quarters.”

United States individual total debt balances; July 2022

Following from the New York Fed quarterly report on household debt and credit.

Total household debt rose $312 billion, or 2 percent, in the second quarter of 2022 to reach $16.15 trillion, according to the latest Quarterly Report on Household Debt and Credit. Mortgage balances—the largest component of household debt—climbed $207 billion and stood at $11.39 trillion as of June 30. Credit card balances saw their largest year-over-year percentage increase in more than twenty years, while aggregate limits on cards marked their largest increase in over ten years. Transitions into delinquency ticked up but remained very low compared to historical levels.

Mortgage balances shown on consumer credit reports increased by $207 billion during the second quarter of 2022 and stood at $11.39 trillion at the end of June, compared to $10.44 trillion four quarters ago.

Balances on home equity lines of credit (HELOC) increased by $2 billion, a modest increase but one that follows many years of declining balances; the outstanding HELOC balance stands at $319 billion.

Credit card balances saw a $46 billion increase since the first quarter – although seasonal patterns typically include an increase in the second quarter, the 13% year-over-year increase marked the largest in more than 20 years. Credit card balances remain slightly below their pre-pandemic levels, after sharp declines in the first year of the pandemic.

Auto loan balances increased by $33 billion in the second quarter, continuing the upward trajectory that has been in place since 2011.

Student loan balances now stand at $1.59 trillion, roughly unchanged from the first quarter of 2022.

Other balances, which include retail cards and other consumer loans, increased by a robust $25 billion. In total, non-housing balances grew by $103 billion, a 2.4% increase from the previous quarter, the largest increase seen since 2016.

National new home construction metrics; August 2022

September 20, 2022 ‐ The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly announced the following new residential construction statistics for August 2022:

Building Permits
Privately‐owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,517,000. This is 10.0 percent below the revised July rate of 1,685,000 and is 14.4 percent below the August 2021 rate of 1,772,000.

Single‐family authorizations in August were at a rate of 899,000; this is 3.5 percent below the revised July figure of 932,000. Authorizations of units in buildings with five units or more were at a rate of 571,000 in August.

Housing Starts
Privately‐owned housing starts in August were at a seasonally adjusted annual rate of 1,575,000. This is 12.2 percent (±14.9 percent)* above the revised July estimate of 1,404,000, but is 0.1 percent (±9.6 percent)* below the August 2021 rate of 1,576,000.

Single‐family housing starts in August were at a rate of 935,000; this is 3.4 percent (±10.1 percent)* above the revised July figure of 904,000. The August rate for units in buildings with five units or more was 621,000.

Housing Completions
Privately‐owned housing completions in August were at a seasonally adjusted annual rate of 1,342,000. This is 5.4 percent (±12.1 percent)* below the revised July estimate of 1,419,000, but is 3.1 percent (±10.5 percent)* above the August 2021 rate of 1,302,000. Single‐family housing completions in August were at a rate of 1,017,000; this is 0.4 percent (±12.8 percent)* above the revised July rate of 1,013,000. The August rate for units in buildings with five units or more was 318,000.

CoreLogic analysis of combined rent and house price appreciation for top US metro areas.

Conference Board Employment Trends Index; August, 2022

The Conference Board Employment Trends Index™ (ETI) increased in August to 119.06, up from an upwardly revised 118.20 in July 2022. The Employment Trends Index is a leading composite index for employment. When the index increases, employment is likely to increase as well, and vice versa. Turning points in the index indicate that a turning point in the number of jobs is about to occur in the coming months.

“August’s increase in the Employment Trends Index indicates the labor market is currently still adding jobs at a robust pace,” said Frank Steemers, Senior Economist at The Conference Board. “But with headwinds in the rest of the economy already evident, expect job growth to decelerate for the remainder of the year.”

Steemers added: “In 2023, the labor market may look very different from today. With the US increasingly likely to fall into recession before the end of 2022, the pace of hiring will probably slow and the number of jobs openings will decrease. On the other hand, attracting and retaining workers may continue to be difficult. Labor shortages may continue to be a challenge for businesses, and even if they ease during a coming recession, they could soon reappear after economic activity picks up again. Therefore, employers may try to hold onto their workers.”

August’s increase in the Employment Trends Index was driven by positive contributions from four of eight components. From the largest positive contributor to the smallest, these were: Initial Claims for Unemployment Insurance, Percentage of Respondents Who Say They Find “Jobs Hard to Get”, Real Manufacturing and Trade Sales, and Number of Employees Hired by the Temporary-Help Industry.

The Employment Trends Index aggregates eight leading indicators of employment, each of which has proven accurate in its own area. Aggregating individual indicators into a composite index filters out “noise” to show underlying trends more clearly.