Consumers’ views of the economy fell by the most in more than three years in September as concerns about employment and the economy grew, the Conference Board said on Tuesday.
Board of Directors Consumer Confidence Index The index fell to 98.7 from 105.6 in August, its biggest one-month drop since August 2021. The Dow Jones consensus forecast was 104.
Each of the five components the organization looked at performed worse that month, with the biggest drops seen among 35-54 year-olds making less than $50,000 a year.
“Consumers’ assessment of the current business environment became more negative and their views of current labor market conditions further softened. Consumers also became more pessimistic about future labor market conditions and more optimistic about the future business environment and future incomes,” said Dana Peterson, chief economist at the Conference Board.
The last time confidence fell further was when inflation finally began to rise to its highest level in more than 40 years.
Stock prices fell slightly in response to the relief, and government bond yields also fell slightly, although they remained broadly positive during trading hours.
In addition to the confidence plunge, the current situation index worsened 10.3 points to 124.3, while the expectations index fell 4.6 points to 81.7. An expectations reading below 80 is consistent with an economic recession.
Respondents’ concerns were mainly focused on employment and inflation.
The number of people who said jobs were plentiful continued to fall, falling to 30.9% from 32.7% in August, while those who said it was difficult to get work rose to 18.3% from 16.8%.
On inflation, the 12-month outlook rose to 5.2%, making worries about rising prices the top economic concern.
“The percentage of consumers who expect a recession within the next 12 months remains low, but the percentage of consumers who believe the economy is already in a recession has increased slightly,” Peterson said.
The survey came less than a week after the Federal Reserve decided to cut interest rates by half a percentage point — its first cut in four years and double the previous quarter-percentage point cut — citing an improving inflation outlook and concerns about a possible softening labor market.
