American Consumer Confidence Slumps in September with Job and Income Vulnerability

The Conference Board said Consumer Confidence slumped to 103.0 in September (consensus 105.0) from an upwardly revised 108.7 (from 106.1) in August. In the same period a year ago, the index stood at 107.8. Three things stood out, consumers’ weakening expectations for future business conditions, job availability, and incomes, all of which has the potential to translate into softer spending activity. High interest rates, inflation coming down but rising prices in general, and for groceries and gasoline in particular are reflected with less hope. Consumers continued to report intentions to spend less on discretionary services.

The expectations Index rose above the 80.0 for just the second time in 16 months of the last 17. Expectations 80 level historically signals a recession within the next year. Despite rising interest rates, consumers are more upbeat, likely reflecting lower inflation and a tight labor market. Although consumers are less convinced of a recession ahead, still anticipating one likely before yearend.

American consumers’ short-term outlook shows a bounce back after they had become became decidedly gloomy, becoming considerably less upbeat about their short-term income prospects. That was scuppering plans to buy homes, autos, and major appliances. We will see if the change is a relief or meaningful.

US Consumer Confidence September 2023

US CB Consumer Confidence August: 103.0 (1985=100) from an upwardly revised 108.7 (from 106.1) in August.

  • In the same period a year ago, the index stood at 107.8.
  • The Present Situation Index fell to 147.1 (1985=100) from 144.8 prior (revised to 146.7
  • The Expectations Index declined to 73.7 (1985=100) from 80.2 prior (revised to 83.3)
  • 1 year Inflation 5.8% vs 5.8% prior
  • Jobs hard-to-get 13.6 vs 14.1 prior

“Consumer confidence fell again in September 2023, marking two consecutive months of decline,” said Dana Peterson, Chief Economist at The Conference Board. “September’s disappointing headline number reflected another decline in the Expectations Index, as the Present Situation Index was little changed. Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular. Consumers also expressed concerns about the political situation and higher interest rates. The decline in consumer confidence was evident across all age groups, and notably among consumers with household incomes of $50,000 or more.”

Peterson added: “Assessments of the present situation were little changed overall, due to divergent views on the state of business conditions and job availability. Fewer consumers said that business conditions were good, but fewer also said they were bad. Regarding the employment situation, slightly more consumers said that jobs were “plentiful,” but also slightly more said that jobs were “hard to get.” When asked about current family financial conditions (a measure not included in calculating the Present Situation Index), the share of respondents citing a ‘good’ situation fell again, and those citing ‘bad’ conditions rose, signaling rising concerns about current family finances.

“Expectations for the next six months tumbled back below the recession threshold of 80, reflecting less confidence about future business conditions, job availability, and incomes. Consumers may be hearing more bad news about corporate earnings, while job openings are narrowing, and interest rates continue to rise—making big-ticket items more expensive. Expectations for interest rates declined in September after surging in the prior month, but the outlook for stock prices continued to fall. Notably, average 12-month inflation expectations have held steady over the past three months despite ongoing complaints about higher prices. Still, the measure of expected family financial situation, six months hence (not included in the Expectations Index) worsened further.

“The proportion of consumers saying recession is ‘somewhat’ or ‘very likely’ rose in September after dropping in August. The fluctuating soundings likely reflect ongoing uncertainty given mixed buying plans. On a six-month moving average basis, plans to purchase autos were flat but remained at an elevated level, while plans to purchase appliances continued to trend upward. But plans to buy homes—more in line with rising interest rates—continued to trend downward.”

Present Situation

Consumers’ assessment of current business conditions was slightly less pessimistic in September.

  • While 20.9% of consumers said business conditions were “good,” down from 21.5 percent in August,
  • 16.4% said business conditions were “bad,” down from 17.3%.

Consumers’ appraisal of the labor market was slightly more positive in September.

  • 40.9% of consumers said jobs were “plentiful,” up from 39.9% in August.
  • But 13.6% of consumers said jobs were “hard to get,” up from 13.2% last month.

Stock market performance and Sentiment Closely Correlated.

Source: University of Michigan and Yahoo

About The Conference Board

The Conference Board publishes the Consumer Confidence Index® at 10 a.m. ET on the last Tuesday of every month. Subscription information and the technical notes to this series are available on The Conference Board website: https://www.conference-board.org/data/consumerdata.cfm.

The Conference Board is the member-driven think tank that delivers trusted insights for what’s ahead. Founded in 1916, a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org.

Source: The Conference Board

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