Consumer confidence in September dropped by the largest number of points in years as people expressed growing concerns about the slowing labor market and the overall economy.
The Conference Board’s consumer confidence index fell to 98.7 in September, down from 105.6 the month before, the group announced on Tuesday. That is another warning signal for Vice President Kamala Harris, who has been working to convince voters she is the right choice for president.
The 10.3-point decline also marks the biggest month-to-month slide since August 2021.
The index that gauges consumers’ assessment of the labor market and business conditions also dropped last month.
The expectations index, which is derived from consumers’ short-term outlook for business, income, and labor market conditions, declined by 4.6 points to 81.7. If the index is below 80, it typically signals a recession ahead, according to the Conference Board.
“Consumer confidence dropped in September to near the bottom of the narrow range that has prevailed over the past two years,” Dana Peterson, the chief economist at the Conference Board, said. “September’s decline was the largest since August 2021 and all five components of the Index deteriorated. Consumers’ assessments of current business conditions turned negative while views of the current labor market situation softened further.”
“Consumers were also more pessimistic about future labor market conditions and less positive about future business conditions and future income,” Peterson added.
The survey was conducted before the Federal Reserve cut its interest rate target by half of a percentage point, the first time the central bank trimmed its rates in over four years. The rate cut comes after years of near-frenzied efforts by the Fed to tamp down inflation.
The move signaled that the Fed sees the inflation threat as over, and it believes the bigger threat is the possibility of an economic slowdown and even a recession.
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The labor market has softened in recent months.
The economy added 142,000 jobs in August, reflecting a downward trend in job creation in recent months. The unemployment rate is now 4.2%, an increase from recent lows of 3.4%. In another sign of cooling, job openings plunged in July to their lowest level since January 2021, when President Joe Biden entered office.