A survey released on Tuesday, September 29th, revealed that consumer confidence in the United States saw a significant decline in September, dropping to its lowest point in nearly 12 and a half years. This was due to concerns among Americans about the future labor market and business conditions worsening as a result of the rising energy costs stemming from the conflicts in the Middle East.
The Consumer Confidence Index, compiled by The Conference Board based in New York, reported a reading of 81.9 for September, down 6.7 from August and well below the economists’ consensus of 89, marking the lowest level since 2014.
Respondents expressed worries about inflation and job prospects. For the first time in four years, more participants considered their personal financial situation to be poor rather than good, according to the organization’s survey questions.
Dana Peterson, Chief Economist at The Conference Board, stated in a release, “For the first time since September 2024, consumers have turned negative on current business conditions.”
She added, “In September, the write-in responses from consumers on factors affecting the economy were predominantly pessimistic. Mentions of high costs for prices, goods, and services, particularly for oil and natural gas prices, hit new highs, reflecting the surge in fuel costs in September.”
Other indicators also pointed towards a deteriorating situation. The Present Situation Index, measuring current conditions, dropped by 7.9 to 109.3, while the Expectations Index, gauging the outlook for the next six months, fell by 5.9 to 63.6.
Regarding employment, the gap between those who believe job opportunities are “plentiful” and those who think they are “hard to get” narrowed further, decreasing by 2.5 percentage points to just 1.7%. This indicator is closely watched as a measure of the health of the labor market.
In light of these data releases, expectations are for inflation to continue rising, primarily driven by the uncertainties stemming from the conflict in Iran. This uncertainty is also reflected in the financial markets, with both U.S. government bond yields and mortgage rates seeing significant increases.
The Consumer Sentiment Index for September showed a decline compared to previous reports, as indicated by the Surveys of Consumers published by the University of Michigan.