With the impeachment inquiry heating up in September, Consumer Confidence on the part of US consumers unexpectedly softened in October. While economists were expecting the headline index from the Conference Board to rebound from 126.3 up to 128.0, the actual reading declined slightly, falling to 125.9. While overall confidence levels remain high by historical standards, it has now been a full-year since the current cycle’s peak of 137.9 last October.

Breaking down confidence levels by sentiment towards present conditions and expectations, consumers are a lot more comfortable with their present situation than they are with the future. While sentiment towards the ‘Present Situation’ rose slightly in October, ‘Expectations’ actually decline for the third straight month. WIth the 2020 election, the US-China trade war, and now a possible impeachment dominating the headlines, you can’t really fault consumers for having less optimism towards the future.

In looking at the spread between Present SItuation and Expectations, after October’s report, we are getting back up near the highest levels of the current cycle. Looking at thei spread over time, in all but one period where this spread topped 50, a recession wasn’t far behind. The only exception was the late 1990s when the spread remained elevated over 50 for well over a year. Interestingly enough, that’s also the last time that consumers had to deal with a possible impeachment of the President.

The elevated spread above is most certainly a potential negative to monitor. Another key indicator to track is sentiment towards the job market and at this point, consumers are still relatively confident.  In this month’s report, the percentage of consumers who consider jobs to be plentiful rose to 46.9% from 44.5% last month. We’ve seen a bit of volatility in this indicator over the last few months, but as long as it doesn’t take a meaningful turn lower, it helps to offset the concern of the chart above. Once confidence towards the jobs market starts to impact expectations, though, that’s when it becomes a problem.