Consumer Confidence Drops on Job Concerns

Consumer confidence fell to a five-month low as consumers remain concerned about reignited inflation and a weakening labor market amid economic uncertainty. The labor market differential, which measures the gap between consumers viewing job as plentiful and hard-to-get, has narrowed for nine straight month and is now at lowest level since March 2021. This is consistent with recent job reports showing fewer job openings and slower hiring.

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 97.8 to 94.2 in September, the lowest level since April. The Consumer Confidence Index consists of two components: how consumers feel about their present situation and their expected situation. In September, the Present Situation Index decreased 7.0 points from 132.4 to 125.4, the largest monthly decline since September 2024; the Expectation Situation Index dropped 1.3 points from 74.7 to 73.4. This is the eighth consecutive month that the Expectation Index has been below 80, a threshold that often signals a recession within a year.

Consumers’ assessment of current business conditions deteriorated in September. The share of respondents rating business conditions “good” decreased by 2.3 percentage points to 19.5%, while those claiming business conditions as “bad” rose by 0.8 percentage points to 15.4%. Meanwhile, consumers’ assessments of the labor market cooled further in September. The share of respondents reporting that jobs were “plentiful” fell by 3.3 percentage points at 26.9%, the lowest level since March 2021; meanwhile, those who saw jobs as “hard to get” stayed unchanged at 19.1%. Consumers were more pessimistic about the short-term outlook. The share of respondents expecting business conditions to improve fell from 20.2% to 18.7%, while those expecting business conditions to deteriorate declined from 23.5% to 22.3%. Similarly, expectations of employment over the next six months were more negative. The share of respondents expecting “more jobs” decreased by 1.8 percentage points to 16.1%, and those anticipating “fewer jobs” fell by 0.3 percentage points to 25.6%.