Consumer Confidence Plummets to Lowest Point Since 2014—What’s Fueling the Fear?

Consumer Sentiment Hits Lowest Point Since 2014 Amid Inflation Concerns

Consumer sentiment fell to its lowest level since 2014 in September, as reported by the Conference Board. The decline was driven by public anxiety over inflation and its effects on the labor market and personal finances.

The Conference Board’s Consumer Confidence Index slipped to 81.9, a decrease of 6.7 points, falling short of the Dow Jones consensus forecast of 89.

Respondents expressed growing worries about inflation and the job market. Notably, more individuals reported their personal finances as “bad” rather than “good” for the first time in the survey’s four-year history.

“Consumer appraisals of current business conditions became negative for the first time since September 2024,” stated Dana Peterson, the Conference Board’s chief economist.

Peterson added that responses to open-ended questions about economic factors were largely pessimistic in September, with references to rising prices and the high cost of goods and services reaching new highs, particularly due to an increase in fuel costs.

Additional indices reflected similar declines: the Present Situation Index fell by 7.9 points to 109.3, while the Expectations Index, which gauges a six-month outlook, decreased by 5.9 points to 63.6.

In terms of employment, the gap between respondents stating that jobs are “plentiful” versus “hard to get” declined by 2.5 percentage points to just 1.7%, a key indicator of labor market health.

These findings coincided with rising inflation expectations amid ongoing uncertainties related to the Iran war, which have influenced financial markets, resulting in increased Treasury yields and mortgage rates.

On average, respondents anticipate an inflation rate of 6.1%, up by 0.3 percentage points from August, with the median expectation also rising by 0.3 points to 5.1%.

The Conference Board’s findings are consistent with similar research, as the University of Michigan’s consumer survey indicated a 7% decline in sentiment in September, recording its second-lowest reading ever.

In other economic news, job openings in August decreased to 7.08 million, down 256,000 from the previous month, particularly due to significant declines in professional and business services and healthcare jobs, as reported by the Bureau of Labor Statistics. The Wall Street consensus had anticipated 7.2 million openings.

While hires increased slightly in August, the rate of quits remained mostly unchanged, and layoffs experienced a small decrease.

News Courtesy of CNBC