Consumer confidence in the US fell significantly in September, with the Conference Board’s Consumer Confidence Index dropping to 98.7 from 105.6 in August.
This marks the largest one-month decline since August 2021. Concerns over jobs and inflation weighed heavily on consumer sentiment, leading to the sharp downturn.
The Conference Board reported that all five components of the index worsened, particularly among consumers aged 35-54 and those earning less than $50,000.
“Consumers’ assessments of current business conditions turned negative, and views of the labor market softened further,” said Dana Peterson, Chief Economist at The Conference Board.
The Present Situation Index, which measures consumers’ outlook on business and labor conditions, dropped by 10.3 points to 124.3, while the Expectations Index, reflecting future economic expectations, fell to 81.7. A reading below 80 on the Expectations Index typically signals a recession.
Rising concerns about the job market were highlighted by a decline in the percentage of respondents who said jobs are “plentiful,” down to 30.9% from 32.7% in August. Meanwhile, the percentage of those who found jobs “hard to get” rose to 18.3%, reflecting growing concerns about employment prospects.
Inflation remains a key concern, with the 12-month outlook rising to 5.2%. Although inflation has slowed compared to its peak, worries about price increases continue to affect consumer sentiment. The decline in confidence also follows the Federal Reserve’s recent decision to lower interest rates by half a percentage point, a move aimed at addressing inflation concerns and preventing further job market deterioration.
Despite these challenges, the economy is projected to grow at a healthy rate in the third quarter, although cracks are starting to show, particularly in the labor market. Stock markets showed minor fluctuations in response to the report, with the Dow Jones and S&P 500 experiencing slight movements on Tuesday.
The next consumer confidence report is set to be released in late October.
Market Watch, CNBC, and PR Newswire contributed to this report.
