U.S. consumer confidence declined for a second consecutive month in September as inflationary concerns and a weakening labor market continued to weigh on household sentiment, according to new data released Tuesday by the Conference Board. The Conference Board’s Consumer Confidence Index dropped to 103.0 in September, down from a revised 108.7 in August.
The latest reading marked the sharpest monthly decline since December 2022 and fell short of economists’ expectations, reflecting increased uncertainty about the near-term outlook for business, income, and employment conditions. The Present Situation Index, which assesses current business and labor market conditions, decreased to 147.1 from 146.7 the prior month.
Meanwhile, the Expectations Index, which gauges consumers’ short-term outlook, fell to 73.7 from 83.3. The expectations component has now remained below the 80 threshold for three consecutive months, a level that historically signals heightened risk of recession. According to the survey, the percentage of consumers describing current business conditions as “good” declined to 20.9 percent from 21.5 percent, while those characterizing conditions as “bad” increased to 17.7 percent from 16.7 percent.
Perceptions of the labor market also softened. Respondents reporting jobs were “plentiful” dropped to 39.7 percent from 40.9 percent, and those stating jobs were “hard to get” rose to 13.6 percent from 13.2 percent. The decline in confidence follows a series of labor market indicators showing signs of cooling. Data released this week by the U.S. Bureau of Labor Statistics revealed job openings edged up slightly to 8.83 million in August from 8.92 million in July, while hiring declined to 5.86 million.
Inflation fears resurface as primary concern for households
The ratio of job openings to unemployed individuals has narrowed significantly over the past year, suggesting reduced demand for labor. Inflation concerns remain prominent among consumers. Although the rate of inflation has moderated from its 2022 peak, survey respondents indicated renewed anxiety over rising prices for food, energy, and housing.
The Conference Board noted that mentions of inflation as a top concern have increased in recent months, displacing interest rates and recession worries as primary economic concerns. Consumer purchasing plans also showed signs of weakening. Intentions to buy major household appliances and motor vehicles declined, while plans to purchase homes remained largely unchanged.
The report also highlighted a decrease in vacation intentions, with fewer consumers planning to travel domestically or internationally in the next six months. Despite the dip in sentiment, consumer spending has remained relatively stable in recent months, supported by wage growth and strong household balance sheets. However, analysts note that sustained declines in confidence can impact spending patterns if labor market conditions continue to deteriorate.
Inflation still viewed as key pressure on household budgets
The Federal Reserve has maintained its benchmark interest rate at a 22-year high to curb inflation, and policymakers have indicated that future rate decisions will be based on incoming data related to employment, inflation, and overall economic activity. September’s decline in consumer confidence may influence those deliberations in the months ahead. The survey was conducted between September 1 and September 18, capturing consumer attitudes amid continued economic uncertainty.
The Conference Board emphasized that while confidence levels remain above 100, a notable deterioration in expectations warrants close monitoring. With inflation pressures persisting and labor market gains slowing, the September data underscores the growing unease among American consumers about the direction of the economy heading into the final quarter of the year. – By Content Syndication Services.