US consumer confidence fell the most in three years in September, as Americans grapple with high prices and a shaky labour market.
According to data released on Tuesday, the consumer confidence index fell 6.9 points to 98.7 in September – the biggest drop since August 2021. This data came in well below economists' expectations, according to a Bloomberg survey.
The Conference Board said consumers most often mentioned higher prices and inflation as factors affecting their outlook on the economy.
The biggest drops in confidence were seen among people ages 35 to 54 and those with annual incomes less than $50,000, according to the Conference Board.
Cody Moore, head of growth strategies at Wealth E&P, said although inflation appears to be easing, prices are still up more than 16% over the past three years, as the job market continues to show signs of weakness.
“This has left consumers worried, not only about rising costs but also about the stability of their jobs, along with the uncertainty of the upcoming election,” Moore told the Post.
Dana Peterson, chief economist at the Conference Board, said the drop in consumer confidence is likely tied to the job market and “reactions to fewer hours, slower wage growth, fewer job opportunities — even though the labor market remains quite healthy, with low unemployment, few layoffs and high pay.”
Although the Federal Reserve cut interest rates by half a percentage point on Wednesday — more than economists had expected — consumers won't see the benefits right away.
“Prices, especially at grocery stores [store] “Gas and fuel prices will continue to rise, and it will take some time for the impact of interest rate cuts to be seen on credit card rates and mortgages,” SMI Group CEO Kenin Spivak told the Post.
The Conference Board said its measure of consumer expectations for the next six months fell 4.6 points to 81.7 — slightly below 80, which typically signals a recession.
A measure of current conditions fell 10.3 points to 124.3. Just 30.9% of consumers said jobs were plentiful in September — down from 32.7% in August and the longest streak of monthly declines since the 2008 financial crisis.
“Despite the recent interest rate cuts by the Fed, the harsh reality is that 50% of Americans haven't started paying off their student loans [loans]“Auto loan balances in the U.S. are at a 20-year high, and Americans own $1.14 trillion in credit,” Ted Jenkin, co-founder and business consultant at Oxygen Financial, told The Post.
Ken Mahoney, CEO of Mahoney Asset Management, said basic items such as food, housing, gas and electricity have become much more expensive than they were a few years ago.
“It's possible that people are starting to see the cracks in the job market and that this report is a sign of worse conditions to come,” Mahoney said. “But only time will tell when we get more data.”
“It usually takes 30 days to see the real impact of an interest rate cut, so it's not surprising that Americans haven't been very excited since the Fed cut rates last week.”
Analysts previously told The Post that it often takes a month for consumers to feel relief in their credit card and auto loan rates, and up to 90 days for mortgages.
Peterson said there has been a “slight increase” in the number of consumers who believe the economy is currently in a recession.