Consumer confidence took a nosedive in September, marking its worst decline in over three years as fears of a weaker labor market and a bleak economic outlook rattled Americans' expectations.
Consumer confidence in September plummeted to its lowest level in more than three years, driven by a weaker labor market and rising concerns about future business conditions and incomes, according to data released by the Conference Board on Tuesday. The index dropped sharply to 98.7 from 105.6 in August, significantly below the expectations of economists who had forecast a slight decline to 103.
This steep decline reflects growing pessimism about the economy’s outlook as both the labor market and future business prospects look increasingly uncertain. "September’s decline was the largest since August 2021, with all five components of the index deteriorating," said Dana Peterson of the Conference Board. Consumers’ assessments of both current and future economic conditions dimmed, with the expectations index—tracking outlooks for income, business, and labor market conditions—falling to 81.7, nearing a level that typically signals an impending recession.
The present situation index, which gauges current business and labor conditions, saw a more dramatic drop, losing 10.3 points to hit 124.3. Consumers reported a more negative view of business conditions and softening confidence in the labor market. Expectations for future income and business performance have also soured, contributing to the overall decline.
This dip in consumer confidence comes as business optimism is also falling. S&P Global reported a decrease in business confidence on Monday, adding to concerns about the economic landscape.
These economic challenges coincide with the rise of Vice President Kamala Harris in presidential election surveys, potentially influencing voters’ perspectives on economic policy. With Harris leading the Democratic ticket, her past support for progressive economic policies and shifts on energy issues like fracking could be seen as contributing factors to the uncertainty surrounding the economy’s future. As the election draws near, the economy’s performance and consumer sentiment will likely play a significant role in shaping the political landscape.
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