Consumer Confidence Hits Lowest Point Since 2014

As of September, Americans’ confidence in the economy has dropped to its lowest levels in nearly a decade, primarily due to rising fuel prices that have heightened inflation concerns. Households are growing increasingly pessimistic regarding business conditions, job availability, and their personal finances.

The Conference Board reported on Tuesday that the consumer confidence index fell by 6.7 points, landing at 81.9, down from 88.6 in August. Economists surveyed by The Wall Street Journal had predicted a reading of 89, so this significant drop was quite disappointing considering expectations for a slight increase.

This decline in confidence marks the third consecutive month of weakening, with negative shifts in both current assessments and future outlooks for the coming six months.

“The Consumer Confidence Index experienced a notable decline in September, following two months of gradual decreases,” stated Dana M. Peterson, the chief economist at the Conference Board.

The Present Situation Index, which evaluates current business and labor conditions, dropped 7.9 points to 109.3. Meanwhile, the Expectations Index, which gauges future business, employment, and income prospects, decreased by 5.9 points to 63.6, marking its third consecutive monthly slump.

Consumers expressed growing concerns about rising living costs in their comments.

“There was a noticeable increase in references to prices, especially the high costs of goods and services, along with the surge in oil and gas prices this September,” Peterson noted.

Household financial situations are also under strain. More individuals reported their family’s current financial situation as poor rather than good, a rare negative sentiment recorded only once before in the last four years. Optimism about future financial situations has also waned.

For the first time since September 2024, views on current business conditions have turned negative. The percentage of respondents describing conditions as poor increased to 20.4 percent from 17.3 percent, surpassing the 18.5 percent who rated them as good.

Moreover, perceptions of job availability have declined. The proportion of people who felt jobs were plentiful dipped to 23.6 percent from 24.5 percent, while those believing jobs were difficult to find rose to 21.9 percent from 20.3 percent. This shift narrowed the labor-market differential to just 1.7 percentage points, down from 4.2 points.

This deterioration in confidence occurs despite historically low unemployment rates. The national unemployment rate remained steady at 4.1 percent in August, while employers added 162,000 jobs, per Labor Department data. Additionally, new applications for unemployment benefits dropped to 197,000 in the week ending September 19, a notably low figure that indicates layoffs are still quite rare.

Nevertheless, consumers expect job opportunities to lessen. About 28.4 percent foresee fewer jobs in the next six months, which is double the 14.0 percent predicting an increase. While families are still more likely to expect income growth versus decline, this margin has tightened to 2.5 percentage points from 5.5 points.

Expectations of inflation have also risen, with consumers estimating an average inflation rate of 6.1 percent over the next year and a median of 5.1 percent, both up by 0.3 percentage points from August.

Moreover, the proportion of people anticipating higher interest rates in the coming year grew by 5.2 percentage points to 68.4 percent, reflecting the timing of the Federal Reserve’s first interest-rate hike in three years during the survey period from September 1 through September 23.

Confidence has decreased among Republicans, Democrats, and independents alike. On a six-month moving average, all age groups and nearly all income groups showed weakened confidence.

Spending intentions have softened too. Plans to purchase homes and vehicles have slightly declined according to a six-month moving average, and expected spending on services has weakened again. Consumers are cutting back on several discretionary activities like hotel stays, air travel, movies, and visits to amusement parks.

Interestingly, vacation plans were one area where enthusiasm remained strong. The percentage of people planning a vacation in the next six months ticked up to 42.6 percent from 42.1 percent, indicating a boost in domestic travel intentions, although plans for international travel have decreased.