Consumer confidence fell to a 3-month low in September due to growing concerns about the job market, despite the labor market remaining healthy. Recent job growth revisions showed fewer jobs were added in 2023 than initially reported. However, the unemployment rate remained at a relatively low level and wage growth continued to outpace inflation. This suggests the labor market is cooling from its red-hot pace but remains steady.
The Consumer Confidence Index, reported by the Conference Board, is a survey measuring how optimistic or pessimistic consumers feel about their financial situation. This index fell from 105.6 to 98.7 in September, the largest monthly decline since August 2021. The Consumer Confidence Index consists of two components: how consumers feel about their present situation and about their expected situation. The Present Situation Index decreased 10.3 points from 134.6 to 124.3, and the Expectation Situation Index fell 4.6 points from 86.3 to 81.7, but still remained above the 80 threshold. Historically, an Expectation Index reading below 80 often signals a recession within a year.
Consumers’ assessment of current business conditions turned negative in September. The share of respondents rating business conditions “good” decreased by 2.3 percentage points to 18.8%, while those claiming business conditions as “bad” rose by 2.9 percentage points to 20.2%. Consumers’ assessments of the labor market worsened as well. The share of respondents reporting that jobs were “plentiful” decreased by 1.8 percentage points to 30.9%, while those who saw jobs as “hard to get” increased by 1.5 percentage points to 18.3%.
Consumers were also less optimistic about the short-term outlook. The share of respondents expecting business conditions to improve fell from 19.1% to 18.5%, while those expecting business conditions to deteriorate rose from 14.5% to 16.6%. Similarly, expectations of employment over the next six months were less positive. The share of respondents expecting “more jobs” increased by 0.1 percentage points to 16.4%, and those anticipating “fewer jobs” climbed by 1.3 percentage points to 18.3%.
The Conference Board also reported the share of respondents planning to buy a home within six months. The share of respondents planning to buy a home rose to 5.7% in September. Of those, respondents planning to buy a newly constructed home increased slightly to 0.7%, while those planning to buy an existing home decreased to 2.4%.
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