NEW YORK — U.S. consumer confidence declined in September, with The Conference Board's Consumer Confidence Index falling 6.7 points to 81.9. This marks the lowest reading for the index since April 2014, following two previous months of softening sentiment.
The Present Situation Index, which assesses current business and labor market conditions, fell 7.9 points to 109.3. At the same time, the Expectations Index, reflecting consumers' short-term outlook for income, business and labor market conditions, fell 5.9 points to 63.6, marking its third consecutive monthly decline.
Dana M. Peterson, chief economist at The Conference Board, said the Present Situation Index fell sharply, and the Expectations Index slipped further into negative territory. Consumer appraisals of current business conditions turned negative for the first time since September 2024. Consumers also expected business conditions and the labor market to weaken over the next six months.
The survey period for these preliminary results spanned Sept. 1-23. This timeframe included a recent federal funds rate hike and ongoing geopolitical tensions, factors influencing consumer sentiment.
Peterson said consumers' write-in responses were pessimistic in September. References to prices, the high cost of goods and services, and specifically oil and gas prices, rose to new highs. This reflects the surge in fuel costs observed during September.
While comments regarding war and conflict eased this month, they remained elevated. Consumers also frequently cited politics, trade and employment in their responses, though to a lesser extent.
The net views of current business conditions—the percentage of consumers reporting good conditions versus bad—declined 3.4 percentage points to 1.9 percent. This fall was driven by an increase in consumers reporting poor business conditions.
Perceptions of current employment conditions also softened. The labor market differential, which measures the share of consumers saying jobs are plentiful minus those saying jobs are hard to get, fell 2.5 percentage points to just +1.7 percent.
Economists polled by Reuters had forecast the index at 89.2, making the reported 81.9 figure a notable miss. This data point suggests persistent concerns about inflation and the efficacy of recent monetary tightening in stabilizing consumer outlook.
For the bond market, a sharp decline in consumer confidence, particularly one driven by inflation concerns and an interest rate hike, reinforces the duration risk associated with current yields. While lower confidence might typically signal future economic slowdown and potential rate cuts, the explicit mention of rising prices and fuel costs suggests that inflationary pressures remain a primary driver, potentially limiting the Federal Reserve's flexibility to ease policy in the near term.
Consumers still anticipated their household incomes to rise, but this expectation was less pronounced compared to previous months, indicating a tempered outlook on personal finances amidst broader economic worries. This complicates the Fed's assessment of economic resilience against inflationary pressures.
