Americans’ confidence in the economy plunged to its lowest level since 2014 in September as rising fuel costs intensified inflation worries and households grew more pessimistic about business conditions, jobs, and their own finances.
The Conference Board said Tuesday that its consumer confidence index dropped 6.7 points to 81.9 from 88.6 in August. Economists surveyed by The Wall Street Journal had expected a reading of 89, making the decline a sharp disappointment against forecasts for a small improvement.
Confidence weakened for a third consecutive month, with deterioration in assessments of both the current economy and the outlook for the next six months.
“The Consumer Confidence Index deteriorated notably in September, following two prior months of softening,” said Dana M. Peterson, the Conference Board’s chief economist.
The Present Situation Index, which measures views of current business and labor-market conditions, fell 7.9 points to 109.3. The Expectations Index, tracking the outlook for business, employment, and income, declined 5.9 points to 63.6, its third consecutive monthly decrease.
Consumers’ written responses pointed to mounting pressure from living costs.
“References to prices, the high cost of goods and services, and oil and gas prices in particular, rose to new heights, reflecting September’s surge in fuel costs,” Peterson said.
The strain extended to household finances. More respondents described their family’s current financial situation as bad than good, only the second negative reading since the question was introduced four years ago. Expectations for family finances also became less optimistic.
Assessments of current business conditions turned negative for the first time since September 2024. The share describing conditions as bad rose to 20.4 percent from 17.3 percent, exceeding the 18.5 percent who called them good.
Views of job availability weakened as well. The share saying jobs were plentiful slipped to 23.6 percent from 24.5 percent, while the share saying jobs were hard to get climbed to 21.9 percent from 20.3 percent. The gap between those readings, known as the labor-market differential, narrowed to just 1.7 percentage points from 4.2 points.
The worsening perceptions come even as unemployment remains low by historical standards. The national unemployment rate held at 4.1 percent in August, when employers added 162,000 jobs, according to the Labor Department. New applications for unemployment benefits fell to 197,000 in the week ended September 19, an exceptionally low level that indicates layoffs remain scarce.
Consumers nevertheless expected job opportunities to deteriorate. Some 28.4 percent anticipated fewer jobs over the next six months, roughly twice the 14.0 percent expecting more. Households remained more likely to expect their incomes to rise than fall, but that margin narrowed to 2.5 percentage points from 5.5 points.
Inflation expectations moved higher. Consumers’ average estimate of inflation over the next year rose to 6.1 percent, while the median reached 5.1 percent. Both increased 0.3 percentage points from August.
The share expecting higher interest rates over the next year jumped 5.2 percentage points to 68.4 percent. The survey ran from September 1 through September 23, encompassing the Federal Reserve’s first interest-rate increase in three years.
Confidence fell among Republicans, Democrats, and independents. On a six-month moving-average basis, confidence weakened across every age group and nearly every income group.
Spending intentions also softened. Plans to buy homes and vehicles edged lower on a six-month moving-average basis, and anticipated services spending weakened again. Consumers pared back plans for several discretionary activities, including hotel stays, airfare, movies, and amusement parks.
Vacation plans provided one exception. The share planning a vacation in the next six months rose to 42.6 percent from 42.1 percent, reflecting stronger domestic travel intentions. Plans for foreign travel declined.
Read the full article here
