New York, NY – Consumer confidence in the economy took a sharp dive in September, marking the largest decline in over three years. The Conference Board reported on Tuesday that its Consumer Confidence Index fell to 98.7, a significant drop from August’s figure of 105.6. This decrease was the most substantial one-month decline since August 2021, coming in well below the Dow Jones consensus forecast of 104.
Each of the five components measured by the organization showed a decline, with the most significant drop seen among individuals aged 35-54 and earning less than $50,000. Dana Peterson, the chief economist at The Conference Board, noted that consumers’ assessments of current business conditions turned negative, while views on the labor market also softened. Pessimism prevailed regarding future labor market conditions, as well as future business conditions and income prospects.
The last time the confidence index experienced such a significant drop was during a period when inflation began to rise. This drop sent ripples through the stock market, resulting in some losses, while Treasury yields, though mostly positive, also saw a slight decrease. The Present Situation measure worsened by 10.3 points, reaching 124.3, while the Expectations Index dropped 4.6 points to 81.7.
Respondents expressed heightened concerns about jobs and inflation, with the percentage of those considering jobs plentiful continuing to decline. Meanwhile, worries about job availability rose, reflecting a more challenging job market. In terms of inflation, the 12-month outlook spiked to 5.2%, making it a top economic concern.
The survey results came shortly after the Federal Reserve’s decision to lower benchmark interest rates by half a percentage point. The move was attributed to a more positive outlook on inflation and concerns about a potential softening labor market. This move, the first rate reduction in four years, aimed to stimulate economic growth amidst growing uncertainties.