The Conference Board reported on Tuesday that consumer sentiment about the economy fell sharply in September, the largest drop in more than three years, as worries about jobs and business conditions grew.
The commission’s consumer confidence index fell to 98.7 from 105.6 in August, the largest monthly decline since August 2021. 132.6, a month before the coronavirus outbreak.
Five components sampled by the organization all performed worse this month, with the largest declines among people ages 35 to 54 earning less than $50,000.
“Consumers’ assessments of current business conditions turned negative, while views of current labor market conditions softened further. Consumers also became more pessimistic about future labor market conditions and were less optimistic about future business conditions and future incomes,” Chief Economist Dana Peterson said.
The last time confidence fell more sharply, inflation had just begun climbing to its highest level in more than 40 years.
Stocks briefly fell after the news, while bond yields fell.
In addition to the sharp drop in the confidence index, the current situation indicator also deteriorated by 10.3 points to 124.3, and the expectations index fell by 4.6 points to 81.7. Readings below 80 are consistent with a recession, according to expectations indicators.
Respondents’ concerns mainly centered on employment and inflation.
The proportion of people who believe that job opportunities are sufficient continued to decline, from 32.7% in August to 30.9%, while the proportion of people who believe that job opportunities are “difficult to find” increased from 16.8% to 18.3%.
In terms of inflation, the 12-month outlook rose to 5.2%, with concerns about rising prices topping the list of economic concerns.
“The share of consumers who expect the economy to be in recession in the next 12 months remains low, but the share who think the economy is already in recession has increased slightly,” Peterson said.
The survey came less than a week after the Federal Reserve voted to cut its benchmark interest rate by half a percentage point, citing a more optimistic outlook for inflation and concerns about potential labor market weakness. It was the first rate cut in four years and double the traditional rate cut of a quarter of a percentage point.
However, the investigation continued until September 17, the day before the Fed approved a rate cut.
