Consumer confidence plunges in September amid elevated concerns about high prices
Consumer confidence took a dive in September to its lowest reading since 2014 as consumers grew increasingly pessimistic about factors affecting the economy — both for the short and long term.
The Conference Board Consumer Confidence Index fell by 6.7 points to 81.9 (1985=100) in September, down from 88.6 in August. The Present Situation Index — based on consumers' assessment of current business and labor market conditions — declined by 7.9 points to 109.3
The Expectations Index — based on consumers' short-term outlook for income, business, and labor market conditions — fell by 5.9 points to 63.6, its third consecutive monthly decline. (The survey period for this month's preliminary results was Sept. 1-23, which included a federal funds rate hike and ongoing geopolitical tensions.)
On a six-month moving average basis, confidence across all age groups and nearly all income groups trended downward. Households with income of $125,000 to $149,000 reported the greatest decline in confidence over the last six months.
"The Consumer Confidence Index deteriorated notably in September, following two prior months of softening," said Dana M Peterson, chief economist at The Conference Board. “Consumers' write-in responses regarding factors affecting the economy were mostly pessimistic in September. References to prices, the high cost of goods and services, and oil and gas prices in particular, rose to new heights, reflecting September's surge in fuel costs."
Consumers' average and median 12-month inflation expectations rose 0.3 ppts in September to 6.1% and 5.1% respectively. The share of consumers anticipating higher interest rates over the next 12 months jumped by 5.2 ppts to 68.4%. Consumers still largely expected stock prices to rise in the next 12 months, but optimism moderated in September.
Purchase Plans
On a six-month moving average basis, plans to purchase autos and homes both declined slightly in September. Among durable goods, furniture and smartphones remained the top categories consumers desired to buy over the next six months.
Spending plans for refrigerators and televisions fell the most on a six-month moving average basis. Plans for other durable goods moderated slightly.
Expected spending on services during the next six months pared back again in September. The top five planned services spending categories were: restaurants/bars/take-out, streaming/internet/mobile services, beauty and personal care, utilities and health care.
Beyond the top five, consumers preferred to spend on cheap thrills and necessities. Anticipated spending for many discretionary activities moderated, including hotels for personal travel, movies, airfare and amusement parks. Household maintenance, financial services and historical sites/museums saw minor increases in planned spending.
Below are highlights from the September report:
Present Situation
Consumers' views of current business conditions fell in September:
- 18.5% of consumers said business conditions were "good," down from 18.8% in August; and
- 20.4% said business conditions were "bad," up from 17.3%.
Consumers' views of the labor market softened in September:
- 23.6% of consumers said jobs were "plentiful," down from 24.5% in August; and
- 21.9% of consumers said jobs were "hard to get," up from 20.3%.
Expectations Six Months Hence
Consumers were more pessimistic about future business conditions in September:
- 15.9% of consumers expected business conditions to improve, down from 17.0% in August; and
- 25.4% expected business conditions to worsen, up from 23.3%.
Consumers were also more negative about the labor market outlook in September:
- 14.0% of consumers expected more jobs to be available, down from 14.8% in August; and
- 28.4% expected fewer jobs, up from 26.1%.
Consumers' assessment of their income prospects was also less optimistic in September:
- 17.9% of consumers expected their income to increase, down from 19.0% in August; and
- 15.4% expected their income to decline, up from 13.5%.
The monthly Consumer Confidence Survey is based on an online sample, is conducted for The Conference Board by Toluna.
