U.S. consumer confidence experienced its steepest decline in three years this September, driven by growing concerns about the labor market, even as more households expressed intentions to purchase homes in the next six months.
Inflation concerns and economic outlook
The Conference Board‘s recently released survey indicated that consumers anticipate rising inflation over the next year, complicating their economic outlook ahead of the presidential election on November 5. The state of the economy is likely to influence the election results significantly, the survey added.
Despite these concerns, consumer interest in travel, dining, and going to the movies remains strong, which could support consumer spending and ongoing economic growth, the survey noted.
Fed’s rate cut
Last week, the Federal Reserve lowered interest rates by 50 basis points, bringing them to the 4.75 to 5.00 percent range. This marked the first reduction in borrowing costs since 2020, with Fed Chair Jerome Powell stating that the move underscores policymakers’ commitment to maintaining low unemployment. The current jobless rate stands at 4.2 percent.
Consumer confidence index details
The consumer confidence index from the Conference Board fell to 98.7 this month, down from an upwardly adjusted 105.6 in August, marking the largest drop since August 2021. Economists surveyed by Reuters had expected the index to rise to 104.0, up from the earlier reported 103.3.
Demographic insights and political context
The survey’s cut-off date was September 17, prior to the start of the U.S. central bank’s easing cycle. The most significant decline in confidence was noted among individuals aged 35 to 54, with most income brackets reporting decreased confidence. Notably, consumers earning under $50,000 annually saw the most substantial drop. The Conference Board also noted that political write-in responses related to the upcoming elections were lower than those seen in both 2020 and 2016.
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