US: Consumer Confidence negatively affected by hurricanes - Nomura

Analysts at Nomura noted that according to The Conference Board, consumer confidence in September declined slightly to 119.8 from 120.4 (Nomura & Consensus: 120.0). 

Key Quotes:

"The present situation index declined to 146.1 from 148.4, while the expectations index increased marginally to 102.2 from 101.7. Note that the cut-off date for the preliminary result was September 18. It appears that Hurricanes Harvey and Irma had a notable impact on state-level sentiment data in Texas and Florida. Looking through the non-seasonally adjusted details, the present situations and expectations indexes both declined for Florida and Texas with larger declines in magnitude for expectations index.

 Regionally, the South Atlantic (DE, MD, DC, VA, WV, NC, GA, FL) and West South Central (AR, LA, OK, TX) that likely have been most affected by Hurricanes Irma and Harvey, respectively, showed large declines in consumer confidence.

The only other region with a large decline was the East South Central (KY, TN, AL, MS) which may have been negatively affected, but to a lesser extent, by Hurricane Harvey. We are unable to calculate the direct effect from the declines in these regions on the aggregate index without regional weights from the Conference Board. However, given the regional dispersion and magnitudes in Figure 2, it is possible that much of the decline in the headline index was driven by inclement weather. 

Overall, consumer confidence remains elevated and any effect from the active hurricane season will likely dissipate over coming months. In the case of Hurricane Katrina in 2005, consumer confidence indices for the East and West South Central regions dropped sharply in September, but rebounded in the subsequent month. Elsewhere in the survey, the labor differential (fraction of respondents reporting jobs plentiful less those reporting jobs hard to get) decreased by 1.5pp to 14.5, but remains well-above the reading of 5.3 from September of last year, indicating continued strength in the labor market."