Consumer confidence falls in September at fastest pace in 3 years

U.S. consumer confidence fell in September by the most in three years as Americans continued to grapple with high prices and an unstable job market.

The consumer confidence index fell 6.9 points in September to 98.7 — the biggest drop since August 2021, according to data released Tuesday. The data came in well below economists’ expectations, According to a Bloomberg survey.

Consumers most often cited rising prices and inflation as factors affecting their outlook on the economy, The Conference Board reported.

People ages 35 to 54 and those earning less than $50,000 a year showed the biggest decline in confidence, according to the Conference Board.

While inflation appears to be slowing, prices are still up more than 16% over the past three years as the labor market shows signs of weakness, said Cody Moore, head of growth strategies at Wealth E&P.

“This has left consumers worried, not only about rising costs but also about the stability of their jobs and the uncertainty surrounding the upcoming election,” Moore told The Washington Post.

The decline in consumer confidence was likely linked to the labor market and “reactions to shorter hours, slower wage increases, and fewer job opportunities — even if the labor market remains quite healthy, with low unemployment, few layoffs, and rising wages,” said Dana Peterson, chief economist at the Conference Board.

Although the Federal Reserve cut interest rates by half a percentage point on Wednesday — the top of the range economists had expected — consumers will not reap the benefits immediately.

Prices, especially in grocery stores [store] “Gas prices will continue to rise, and it will take some time before interest rate cuts reach credit card and mortgage rates,” SMI Group CEO Kenen Spivak told The Washington Post.

A gauge of consumers' expectations for the next six months fell 4.6 points to 81.7 – still slightly above a reading below 80, which typically indicates a recession, the Conference Board said.

The current conditions gauge fell 10.3 points to 124.3. Just 30.9% of consumers said jobs were plentiful in September — down from 32.7% in August and the longest streak of monthly declines since the 2008 financial crisis.

“Despite the recent interest rate cuts by the Federal Reserve, the stark reality is that 50% of Americans have not started paying off their student loans. [loans]“Auto loans are at a 20-year high in terms of defaults, and Americans have $1.14 trillion in credit,” Ted Jenkin, co-founder of Oxygen Financial and a business consultant, told The Washington Post.

Ken Mahoney, CEO of Mahoney Asset Management, noted that basics like food, shelter, gas and electricity are much more expensive than they were a few years ago.

“It’s possible that the public is starting to notice cracks in the labor market and that this report is a sign of worse things to come,” Mahoney said. “But only time will tell when we get more data.”

“It usually takes 30 days before anyone sees the real effects of a rate cut, so it’s no surprise that Americans haven’t been terribly enthusiastic since the Fed cut rates last week.”

Analysts told The Washington Post earlier that it often takes a month for consumers to feel comfortable with rates on credit cards and auto loans, and up to 90 days for mortgages.

There is a “slight uptick” in the percentage of consumers who believe the economy is currently in a recession, Peterson said.