by Concerns about income, business and labor market conditions that could impact jobs affect several key readings in monthly survey
WASHINGTON — Consumer confidence fell this month based on consumers’ concerns related to income, business and labor market conditions, including their outlook regarding jobs.
The Conference Board reported that the Consumer Confidence Index fell to 98.7 from an upwardly revised 105.6 in August.
Other indexes also declined, including the Present Situation Index based on consumers’ assessments of current business and labor market conditions, which declined to 124.3 from 134.6. The Expectations Index, which is based on consumers’ short-term outlook for income, business and labor market conditions, fell to 81.7, from 86.3. The board noted that a reading below 80 signals a recession.
The board also noted that the drop in confidence was the largest for consumers ages 35 to 54, with those consumers being the least confident and those under 35 being the most confident. In addition, the largest decrease in confidence was among those earning less than $50,000. Those earning more than $100,000 were the most confident on a six-month moving basis.
“Consumer confidence dropped in September to near the bottom of the narrow range that has prevailed over the past two years,” said Dana M. Peterson, chief economist at the Conference Board, adding that the September decline was the largest since August 2021, with all five components of the index showing a drop. “Consumers’ assessments of current business conditions turned negative while views of the current labor market situation softened further. Consumers were also more pessimistic about future labor market conditions and less positive about future business conditions and future income.”
“The deterioration across the index’s main components likely reflected consumers’ concerns about the labor market and reactions to fewer hours, slower payroll increases, fewer job openings — even if the labor market remains quite healthy, with low unemployment, few layoffs and elevated wages,” Peterson added. “The proportion of consumers anticipating a recession over the next 12 months remained low but there was a slight uptick in the percentage of consumers believing the economy was already in recession.”
In line with the recent drop in interest rates, the survey showed that the share of consumers expecting higher interest rates over the next 12 months fell for the fourth month in a row to 46.5, which the board said was the lowest since this past February. The share expecting lower rates also rose to 33.3%, which was the highest since April 2020.
In addition, the survey showed that consumer buying plans for big-ticket appliances were mixed and that their plans to buy a smartphone or laptop/PC declined. The good news for the furniture industry is that on a six-month moving basis, purchasing plans for a home improved, although the sector could see competition from planned vehicle purchases, which also rose. Consumers also indicated they planned to purchase more goods versus services.
Consumers said they were open to travel and dining out, but there also was interest in streaming movies at home, while interest in going to the movies also rose. In addition, planned spending on services such as health care and utilities also was strong, the board said.
The survey also showed that average 12-month inflation expectations rose to 5.2% in September, despite slower overall inflation and declines in the price of some goods. Mention of prices and inflation remained among the top write-in responses as issues affecting consumers’ views of the economy, while more consumers also mentioned lower inflation. There also were more write-in responses with mentions of interest rates as a key issue relating to the economy.
Consumers’ expectations for the stock market stabilized, with 25% surveyed expecting stock prices to fall over the year ahead, and 47.6% expecting stock prices to rise. This compares to 26.5% expecting stock prices to fall and 47.9% expecting them to rise in August.
Other key highlights of the survey were as follows:
Regarding their present situation, consumers’ assessments of current business conditions declined in September:
+ 18.8% of consumers described business conditions as “good,” down from 21.1% in August.
+ 20.2% said business conditions were “bad,” up from 17.3%.
Regarding the labor market:
+ 30.9% of consumers said jobs were “plentiful,” down from 32.7% in August.
+ 18.3% of consumers said jobs were “hard to get,” up from 16.8%.
Of consumer expectations six months from now:
+ 18.5% of consumers expected business conditions to improve, down from 19.1% in August.
+ 16.6% expected business conditions to worsen, up from 14.5%.
Regarding the labor market outlook six months from now:
+ 16.4% of consumers expected more jobs to be available, up slightly from 16.3% in August.
+ 18.3% anticipated fewer jobs, up from 17.0%.
And regarding their income prospects:
+ 18.0% of consumers expected their incomes to increase, down from 18.6% in August.
+ 13.0% expected their incomes to decrease, up from 11.7%.
