Latest / C-Suite Perspectives / State of the Economy for October 2026: Consumer Confidence Rises, CEO Confidence Falls

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State of the Economy for October 2026: Consumer Confidence Rises, CEO Confidence Falls · C-Suite Perspectives

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  And CEOs are generally worried about falling behind in, in terms of AI and
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  implementing this new technology, but at the same time, you know, they're,
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  they're worried about not running too fast into it, and, um, you know, there's
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  a lot of risk as well, uh, when, when you're dealing with new technologies.
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  Today we're gonna talk about what the latest Consumer Confidence Index and
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  fourth quarter CEO confidence results reveal about the US economy, where
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  consumers and business leaders agree or diverge, and what the expectations
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  suggest for growth, spending, hiring, and investment heading into 2027.
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  Joining me today is Allan Li, Associate Economist at the Conference Board.
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  Allan, thanks for being here today.
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  Hmm.
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  Thank you, Alex.
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  Let's begin with the consumer.
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  The latest Consumer Confidence Index came in at 91.7, compared
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  with 84.2 in September.
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  What's the biggest takeaway from this month's result, and what does
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  it tell us about how Americans are feeling about the economy?
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  Sure, yeah.
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  Um, you know, I work with a lot of brilliant economists on, uh, on this,
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  um, these pieces, so hopefully it brings some perspective and add my own to this.
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  Uh, so 84.2, yeah, that's the number, final number in September.
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  That includes a little bit of a, a increase in, um, upward revision,
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  two-point upward revision about, um, and it really follows the story in
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  retail gasoline prices this time.
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  Um, so we really saw not only the level, but like, the rate of rise in
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  September, where, you know, some areas reached interim, interim highs, you
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  know, in September before they started really coming down a little bit towards
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  the end of September and into October.
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  So the consumer, you know, it, it was really a mini shock on the index in
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  September, which, um, and the index did, uh, what it usually does when
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  there's a shock and a subsequent li- a little bit of a relief.
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  But we're only back to June 2026 levels, so it's even though, uh, the numbers,
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  uh, it's a quite a big rally, it's, um, it's still, still on a downtrend
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  since, um, the end of 2021, uh, or 2022.
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  And so it's really the consumer moods got, uh, were a little bit better.
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  They had a little bit of relief in, in October.
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  Yeah, no, that's a very good point.
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  So, um, it is indeed just sort of, you know, tapping into what, how consumers
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  are feeling, you know, about the economy.
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  And, you know, once we're digging below the headline number, what are
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  consumers actually telling us about their expectations for jobs, income, inflation?
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  You know, everybody pays a lot of attention to that.
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  Are we seeing concerns about their current financial circumstances, or
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  is the bigger issue really here, you know, what lies ahead a few months out?
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  Consumers still feel that overall more people are saying their household income
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  should be, uh, higher in six months than, than those who say they would be lower.
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  Um, we don't ask if this is, uh, nominal or, or, or real, but
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  the number is gonna be higher.
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  They, they still-- So in that, they still feel their family situation is okay.
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  Um, they, I think consumers are generally making do, right?
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  The, the present situation is at around 120.
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  It's in positive, slightly positive territory even though, you know,
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  the labor ratings have softened.
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  Um, they, they don't expect, uh, to be facing, uh, an easy
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  labor market in six months.
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  And, and they, they do feel that there's potential for, um, business
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  conditions to get a little bit worse.
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  That's in the expectations.
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  It's in ne- negative, uh, that, which signals a bit of worry.
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  Um, but in terms of their own situations, I think they're, they're making do.
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  Um, most of the comments were, uh, regarding, like, worry about, uh, prices,
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  you know, uh, inflation, the cost of, uh- Food, groceries, fuel, um, gasoline.
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  And so those mentions have, have, have gone up while, you know, the w- mentions
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  of war, you know, a conflict, uh, geopolitical, that's, that's secondary.
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  Th- th- that has gone down, but it's a cl- close second.
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  And, and number three there are, um, a little bit more people are talking about,
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  uh, the job market and job prospects.
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  And so I think that, uh, helps to paint a better picture of the- Yeah, no,
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  that's an interesting point, Allan.
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  I mean, that's clearly a concern.
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  I mean, I just published a paper on diesel prices, which are,
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  you know, astonishingly high.
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  And, you know, while that is really sort of a transportation and freight, uh,
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  supply chain issue for, for the most part in the economy, but it certainly
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  also signals that transportation costs driven by gasoline, various
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  other components, it's a concern.
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  And it's also something that is being, you know, shown at every
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  corner where there's a gas station, so it's a very prominent feature.
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  You know, but we had also a different data release.
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  So let's look at, um, CEOs.
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  The Conference Board's latest measure of CEO confidence fell six points to 46
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  in the fourth quarter, um, moving back into negative territory from a more
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  positive reading a m- um, a quarter prior.
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  So what drove that decline?
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  Why have business leaders become more pessimistic?
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  I- is this a big change?
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  W- what does, what does that mean for the outlook, for the outlook for the economy?
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  Yeah.
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  This is another quite a powerful survey.
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  Uh, you know, we, we poll every quarter, um, Fortune 500, uh,
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  large cap, uh, company, CEOs of large cap companies, you know?
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  So, um, the, the latest dip, uh, you know, six points to 46 is really, um…
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  And in Q3 it was 52.
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  It's really, uh, went from mild enthusiasm to maybe, like, moderately
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  cautious, uh, at just below 50.
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  That means, you know, somewhat more CEOs are saying conditions, you know, now and
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  the future are, are worse or slightly deteriorating, but, um, uh, somewhat.
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  So and really what drove it is, um, you know, in, in the s- towards the
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  summer and into Q4, we had those, that rise in geopolitical tensions
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  with, uh, you know, rising oil prices.
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  Um, and the survey was conducted, um, during September 21st to October 5th,
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  so that's kind of when, you know- Uh, cr- crude prices were, you know,
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  peaking, uh, ar- around this time A- and, and sometimes it is certainly
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  true that the CEO perspective is at least, you know, a little bit
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  different than consumer perspectives.
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  That also comes to different, um, the, you know, the one is a
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  quarterly, one is a monthly survey.
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  But let's just take these two perspectives on the economy, American households
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  and CEOs running major businesses.
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  Where are these two sentiments aligned, and where do they differ?
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  What, what can we learn by looking at these two measures together, really?
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  So for, for one you have, like, the consumer, you know, they're looking to
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  maintain their lifestyle, you know, in the face of, you know, higher prices.
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  And, and then you have companies who are looking to maintain their, their
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  growth trajectory, um, with, uh, investments in, in productivity, I think.
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  And that's what we're seeing in the two surveys.
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  So right now, you know, even in this rougher patch, uh, with a lot of headwinds
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  and uncertainty, they're working… They're sorta, sort of working together
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  or coming together, uh, allowing the economy to chug along, both, you know,
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  on their, on both of their resilience.
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  Uh, so that, that's what w- that's what I'm seeing.
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  A- and both surveys I think indicate fairly low risk of
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  recession in the next 12 months.
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  All right.
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  Well, Allan, that, that's certainly good news, right, in terms of the,
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  the recession odds and the way that this fits together in terms of
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  what it tells us about the economy.
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  So, um, you know, moderately, um, you know, the, the sentiment is, is sometimes
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  a little cloudy, but it's certainly interesting to get these different reads
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  from these two sides of the, of the, you know, b- basically economic spectrum.
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  So, um, one interesting finding that I picked up on in the CEO survey is
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  that, you know, despite declining confidence, 89% of CEOs, they plan to
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  maintain or increase capital spending.
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  How do we reconcile that investment commitment with sort of some of their…
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  slightly more negative economic outlook.
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  What does that suggest about business resilience heading into the next year?
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  So in the latest reading in Q4, most CEOs are still maintaining their
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  capital investment, and more are, uh, planning to increase it e- e- even
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  despite the overall measure declining.
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  And I think a large part of this is regarding the AI build-out.
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  Um, the surveys indicate that, you know, CapEx will continue,
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  and they're looking for, uh, to increase their productivity, right?
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  Uh, that's the, that's the number-one goal.
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  Uh, increase productivity, lower, lower costs.
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  And CEOs are generally worried about falling behind in, in terms of AI and
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  implementing this new technology, but at the same time, you know, they're,
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  they're worried about not running too fast into it, and, um, you know, there's
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  a lot of risk as well, uh, when, when you're dealing with new technologies.
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  Um, so their top concern is, is of, of cyber, you know, cybersecurity,
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  um, and, and AI as well.
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  So it's not only their top concern, it's also their, um, their, their top,
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  uh, investment, uh, priority, I think.
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  So, you know, one of the linkages really between these two surveys is the labor
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  market, and that's, you know, everybody can see that from a different side.
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  So consumers, they have become, to a certain extent, concerned about
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  job availability looking forward.
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  CEOs, they might be a little bit more evenly divided between expanding
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  and reducing their workforces.
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  If we take all of this evidence together, is this early signs of maybe a more
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  significant labor market slowdown?
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  And what's the result of that?
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  What does that mean for consumer spending?
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  So the consumers really, um, they still think that cons- uh, you
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  know, jobs are- Uh, somewhat easier to get than hard to get, right?
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  So, so the labor market differential is still in positive territory.
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  Um, uh, obviously it's softened a lot since, um, 2022, but their future,
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  um, the future-looking, uh, uh, ratings of the labor market, I guess.
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  Um, they are worried about… Looks like they're worried
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  about potential underemployment.
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  You know, there would be less prospects if they were to switch jobs.
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  There, there would be, um, less jobs for them to, you know, to choose
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  and, and to do and to do better.
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  So, but at the same time, you know, um, are, there, there could be concern
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  about AI taking their jobs, but I don't think there is evidence of that yet.
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  Uh, it's unclear.
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  So overall, um, not yet.
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  Uh, and also on the CEO survey side, more importantly, uh, more
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  CEOs are, um, expecting to expand their workforce than, than to,
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  um, reduce their workforce, right?
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  So we're still at a net positive there.
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  Both of them are saying the same thing.
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  You know, w- we do see some slowing, but, um, it's, it's still all right
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  and we, there's no real signs of, uh, anything more significant.
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  Right.
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  That's really interesting.
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  I mean, it's, it's, it's hard to see something that is really systematic,
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  right, in the, in the labor market.
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  We see, when you just check the media, you see these kind of announcements
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  sometimes of reduced hiring or even layoffs, and then certainly there's also
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  individual concerns about, oh, we're all going to get swallowed by AI pretty soon,
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  and then what are we gonna do, right?
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  So it's, it's, it's interesting.
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  It's an interesting times.
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  If we all weren't affected, it would be even more interesting.
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  But in any case, so, you know, the other side to this, one side is
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  employment, the other side is inflation.
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  So both consumers and businesses, they have been navigating
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  inflation, energy prices.
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  We already touched on some of the transportation costs that have
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  gone up, but also some of the geopolitical uncertainty and, and
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  what's happening in monetary policy.
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  If you looked into that somewhat cloudy crystal ball here, and you're looking
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  forward, you know, which of those has the greatest impact on consumer
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  confidence and, and confidence in general, both on the consumer as well
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  as the business side going forward?
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  Looking at the survey itself, though, you know, all of the, really the
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  comments and the movement is, is regarding inflation a- and price levels.
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  Um, you know, consumers are economizing.
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  They're, they're spending a little less on, on big-ticket items.
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  They're, they're not, um… A little bit less on, on going out, traveling.
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  A little, you know, uh, they're flying less, but they're, but
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  they're taking more domestic trips.
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  Consumers want prices to come, come down, obviously.
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  But if inflation can slow, you know, and on the… For wages, if they can keep up,
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  I think that should keep things going.
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  Um, and we, we do see good signs in the CEO survey for that.
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  They're, they're planning to, uh, have higher wage increases.
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  Uh, potentially, uh, the CEO surveys, you know, obviously they also flagged
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  geopolitical uncertainty right after AI and, and cyber issues.
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  Um, but they're hoping to see that increased productivity from their
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  AI investments, you know, while keeping track of the risks inherent
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  in all this, uh, new technology.
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  And so, if they can all, uh, come together, I guess they would, it
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  would improve, uh, the numbers.
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  Right.
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  Interesting points.
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  Yeah, so, you know, if we're just sort of, you know, we're already
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  at the end of October, um, it's amazing how much time flies.
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  We're moving into the new year.
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  What should businesses watch the most closely?
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  What should CEOs watch the most closely in terms of getting a read
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  on, you know, some of these, these confidence measures and just paying
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  attention to what's important to them?
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  I mean, is there, is there any one variable?
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  I mean, you, you count… You, you covered really the field
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  already with, with a lot of these.
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  Mm-hmm.
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  But if you had to isolate one, a- is there any one thing you would mention?
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  We believe the economy will grow at about 2% this year and into
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  next year, uh, and, and next year.
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  So our view is that, like, the e- economy will continue to be resilient.
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  Um, and that's what we're seeing in the survey there.
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  Maybe one thing, though, uh, if, uh, consumer confidence stays in this current
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  sort of depressed trajectory, um, you know, spending would be increasingly
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  be concentrated among higher-income households, whereas lower-income
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  consumers may be more cautious.
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  Uh, this, but they're, overall, they're still spending.
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  Uh, they're, but they're picking their spots more and, and economizing.
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  Um, on the CEO side, you know, firms overall, they're,
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  they're, they're not firing.
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  We're still in a, a low-hire, low-fire environment that
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  they're still retaining workers.
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  So people still have jobs and income to, to keep up, um, uh, their,
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  their, I guess, their lifestyles, but, but with more economizing.
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  You know, barring another shock, like let's say an energy or supply shock or,
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  you know, some large correction in the stock market, barring any shock like that
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  that would derail growth, um, we should be all right for the foreseeable future.
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  Um, and I wouldn't look at one thing.
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  I would look at the entirety of the surveys and not just the
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  headline, and w- we have a lot of rich data i- in, in both of these.
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  Yeah, no, that's a very good plug for our, for our data sources.
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  I think that's a very good read on just the complexity and the, you
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  know, the complexity of the situation and, and how nuanced it really is.
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  And there's more to, there's more to discover and certainly more to explore
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  and, uh, you know, we can, you know, always hear for questions from the
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  audience beyond this, this podcast here.
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  But, uh, Allan, that was a great conversation.
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  Thanks for joining me today.
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  Hmm.
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  Thanks so much, Alex.