U.S. consumer confidence fell to a 12-year low in September, with the Consumer Confidence Index decreasing to 81.9 from a downwardly revised 88.6 in August. The decline was driven by concerns about high gas prices and their impact on the present and future. This reading marks the lowest since 2014, according to the Wall Street Journal, and was well below economists’ forecast of 89.
The results of the survey, conducted by The Conference Board, could spell trouble for the holiday season, according to Jeffrey Roach, chief economist for LPL Financial. Roach noted that Americans are feeling less secure about their jobs and are pulling back on plans for big-ticket purchases. He also stated that although layoffs data show employers aren’t yet cutting workers to match the gloom, Americans feel jobs are more scarce, which is a warning sign for holiday spending.
Consumer Confidence Index Details
The Present Situation Index, reflecting consumers’ assessment of current business and labor conditions, dropped to 109.3 from August’s revised figure of 117.2. Both labor market and business condition perceptions worsened, with a notable increase in consumers describing business conditions as ‘bad.’
The Expectations Index, which measures consumers‘ outlook on income, business, and labor market conditions in the near future, fell to 63.6 from an upwardly revised 69.5 in August. All three components of the Expectations Index fell, with appraisals of current business conditions dropping into the negatives for the first time since September 2024. This marked the index’s third consecutive monthly decline and the 20th consecutive month that expectations remained below the threshold of 80, a level which typically signals a recession is ahead, according to The Conference Board.
Demographic Breakdown
Confidence declined across all age groups and nearly all income groups on a six-month moving average basis. Higher-income groups were still generally more optimistic, but those with a household income of $125,000 to $149,000 posted the greatest decline in confidence over the last six months. By generation, confidence remained highest among Gen Z consumers, followed by millennials. Confidence among Generation X, baby boomers, and Silent Generation consumers continued to decline. Additionally, confidence declined across all political affiliations, including Democrats, Republicans, and Independents.
By demographic, the survey also found that consumers’ average and median 12-month inflation expectations rose slightly in September. A majority of respondents (68 percent) expect to see higher interest rates over the next 12 months, up from 63 percent in August. Consumers also still expect higher stock prices a year from now, though that optimism moderated in September.
Spending Plans
Plans to purchase cars and homes both declined slightly in September. The most popular items in the durable goods category remained furniture and smartphones, while plans to buy refrigerators and TVs fell on a six-month moving average basis. Plans to buy other durable goods moderated slightly. The top five services consumers plan to spend money on included restaurants, bars, and take-out; streaming, internet, and mobile services; beauty and personal care; utilities; and health care. Consumers preferred to spend on “cheap thrills and necessities” beyond these top five services.
Plans to spend on discretionary activities, such as hotels for personal travel, movies, airfare, and amusement parks, moderated. This increase was limited to domestic travel, with plans to travel abroad slipping this month.
The Consumer Confidence survey results for October are scheduled to be released on October 27. The survey will provide further insight into the state of consumer confidence and its potential impact on the holiday season. According to Dana M. Peterson, chief economist at The Conference Board, “The Consumer Confidence Index deteriorated notably in September, following two prior months of softening.” The survey period ran from Sept. 1-23, which included a federal funds rate hike as well as ongoing geopolitical tensions.
