NEW YORK — U.S. consumer confidence deteriorated significantly in September, with The Conference Board's Consumer Confidence Index falling 6.7 points to 81.9. This marks the lowest level for the index since April 2014.
The decline represents the fourth consecutive monthly miss for confidence and the largest single-month decrease since December 2023. Both the Present Situation Index and the Expectations Index contributed to the downturn, with the latter slipping further into negative territory.
Dana M. Peterson, chief economist at The Conference Board, said consumer appraisals of current business conditions turned negative for the first time since September 2023. Perceptions of the current labor market also worsened, though they remained positive.
The labor market differential—the share of consumers reporting jobs as "plentiful" minus those saying jobs are "hard to get"—tumbled to its lowest point since February 2021. Consumers anticipate both business conditions and the labor market will weaken over the next six months.
Inflation expectations rose in September. Consumers' average 12-month inflation expectation jumped to 6.1 percent, while the median expectation reached 5.1 percent. This surge directly reflects September's rise in fuel costs, which consumers cited frequently.
The share of consumers expecting higher interest rates over the next 12 months increased by 5.2 percentage points, reaching 68.4 percent. This elevated expectation for rate hikes, coupled with rising inflation forecasts, suggests market participants are pricing in a more restrictive policy outlook.
While consumers still largely expect stock prices to rise in the next 12 months, optimism moderated during September. The divergence between falling confidence and persistent stock market optimism signals a potential duration risk for equity portfolios if monetary policy remains tight longer than anticipated.
Confidence trended downward across all age groups and nearly all income groups on a six-month moving average. Higher-income groups, specifically those with household incomes between $125,000 and $149,000, reported the greatest decline in confidence during this period.
By generation, Gen Z and Millennials maintained the highest confidence levels on a six-month moving average, despite the overall decline. Conversely, confidence continued to weaken among Generation X, Baby Boomers and the Silent Generation.
The September decline in confidence spanned all political affiliations, affecting Democrats, Republicans and Independents alike. This broad pessimism indicates widespread concern across the electorate.
Consumers' write-in responses regarding economic factors were predominantly pessimistic. References to high prices for goods and services, particularly oil and gas, reached new highs. Comments about war and conflict eased slightly but remained elevated, while politics, trade and employment were also frequently cited concerns.
