Consumer sentiment about the economy fell in September to its highest level in more than three years as concerns about jobs and business conditions grew, the Conference Board reported Tuesday.
The Dow Jones consumer confidence index fell to 98.7 from 105.6 in August, the biggest monthly decline since August 2021. The Dow Jones consensus had been calling for a reading of 104.
Each of the five segments sampled by the organization performed worse during the month, with the biggest declines among those aged 35 to 54 and earning less than $50,000.
“Consumers’ assessments of the current economic situation 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 economic conditions and future incomes,” said Dana Peterson, chief economist at The Conference Board.
The last time the confidence index fell more was when inflation was just starting to climb to what was ultimately the highest level in more than 40 years.
Stocks posted some losses following the relief, while Treasury yields, while still mostly positive on the session, also edged lower.
In addition to the sharp drop in the confidence index, the current situation index deteriorated by 10.3 points to 124.3 and the expectations index fell by 4.6 points to 81.7. As for the expectations index, an index below 80 is compatible with a recession.
Respondents’ concerns mainly relate to employment and inflation.
The percentage of those who believe jobs are plentiful continued to decline, from 32.7% in August to 30.9%, while the measure of “hard to get” jobs rose from 16.8% to 18.3%.
As for inflation, the 12-month outlook rose to 5.2%, with concerns about rising prices topping the list of economic worries.
“The proportion of consumers anticipating a recession in the next 12 months remained low, but there was a slight increase in the percentage of consumers who believed the economy was already in a recession,” Peterson said.
The survey comes less than a week after the Federal Reserve decided to cut key interest rates by half a percentage point, citing a more favorable inflation outlook and concerns about a possible slowdown in the labor market. It was the first rate cut in four years and double the traditional quarter-point reduction.
