Consumer confidence fell for the second month in a row, from 108.7 in August to 103 in September, according to the latest data from The Conference Board.
“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.”
The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—grew slightly from 146.7 to 147.1. For current business conditions, 20.9% of consumers said they were “good,” down from 21.5% last month. Additionally, 16.4% said business conditions were “bad,” down from 17.3%. For the labor market, 40.9% of consumers said jobs were “plentiful” (up from 39.9%), while 13.6% of consumers said jobs were “hard to get” (up from 13.2%).
“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,” explained Peterson. “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.”
The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—fell from 83.3 to 73.7 (1985 = 100).
“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,” added Peterson. “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.”
As for consumers’ short-term business conditions outlook, 14.1% expect business conditions to improve (down from 17.5%), and 18.4% expect conditions to worsen (up from 17.3%). For the labor market outlook, 15.5% of consumers expect more jobs to be available (down from 17.5%), and 18.9% anticipate fewer jobs (up from 18%). For short-term income prospects, 16.3% of consumers expect their incomes to increase (down from 18.7%), and 14.4% expect a decrease (down from 11.9%).
“The proportion of consumers saying recession is ‘somewhat’ or ‘very likely’ rose in September after dropping in August,” concluded Peterson. “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.”
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