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U.S. consumer confidence drops to a four-month low on outlook

A shopper carries an Express bag on Powell Street in San Francisco on Nov. 29, 2022.   (David Paul Morris/Bloomberg)
By Reade Pickert Bloomberg

U.S. consumer confidence slumped to a four-month low in September, dampened by a deteriorating outlook for the economy and labor market.

The Conference Board’s index declined to 103 this month from an upwardly revised 108.7 in August, data out Tuesday showed. The figure fell short of the median estimate of 105.5 in a Bloomberg survey of economists.

The group’s gauge of current conditions rose slightly to 147.1. A measure of expectations – which reflects consumers’ six-month outlook – fell to 73.7, the lowest since May. A reading below 80 historically signals a recession within the next year.

Despite greater confidence among economists that the U.S. can avert a recession, American workers are increasingly concerned about their finances and employment prospects.

“Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular,” Dana Peterson, chief economist at the Conference Board, said in a statement.

“Consumers also expressed concerns about the political situation and higher interest rates.”

The labor market – and broader economy – have remained remarkably resilient in the face of a rapid increase in interest rates, supporting incomes and household balance sheets.

That said, hiring has slowed and prices have picked up at the pump. Many consumers have run down their savings, and decades-high borrowing costs are pushing homeownership further out of reach.

Separate data out Tuesday shows home prices continued to rise in July, and new-home sales fell to a five-month low in August.

At the moment, Americans were slightly more positive about the labor market, with just under 41% of consumers saying that jobs are “plentiful.”

But looking over the next six months, a greater share of Americans anticipate fewer jobs will be available.

The difference between the current “plentiful” and “hard-to-get” measures – a metric watched closely by economists as a gauge of labor-market strength – increased to 27.3.

Over the past two years, this measure has slid to a trend more in line with pre-pandemic levels.

A gauge of expected inflation over the next year was little changed from the prior month.

The share of consumers saying recession is “somewhat” or “very likely” to occur picked up. Buying plans for the next six months retreated for cars, homes and major appliances.