Consumer confidence drops to 7-month low

The Consumer Confidence Index, a key indicator that offers a glimpse into purchasing attitudes among U.S. consumers, recorded another decline in September, continuing the streak of decreases seen in both August and July, according to new Conference Board data. 

Falling to 109.3 from the 115.2 recorded in August, the new number indicates persistent pessimism among U.S. consumers, which in turn indicates lingering doubts about their individual finances as the COVID-19 pandemic continues.

“Consumer confidence dropped in September as the spread of the Delta variant continued to dampen optimism,” said Lynn Franco, senior director of economic indicators at The Conference Board. “Concerns about the state of the economy and short-term growth prospects deepened, while spending intentions for homes, autos, and major appliances all retreated again.”

This most recent decline is now a seven-month low, according to calculations from Reuters, with these most recent readings being the lowest recorded since February. 

American consumers also feel pessimistic surrounding the current business conditions in the U.S. Measured by the Present Situation Index, 19.3 percent of consumers described the business climate to be “good,” a drop from the 20.2 percent seen in August. 

Simultaneously, more consumers felt that business conditions were “bad” in September than in August.

Regarding the broader labor market, 55.9 percent of consumers found job opportunities to be “plentiful,” representing a slight increase from August data. 

Despite the job outlook being relatively positive, more consumers found jobs to be hard to get. The six-month outlook is also less optimistic, with just 21.5 percent of consumers feeling that business conditions in the economy will improve, a decrease from 23.4 percent in August.

Consumers also felt their incomes were threatened, with 11.5 percent reporting that they expect their incomes to fall, a jump from 9.9 percent of respondents who felt the same way one month ago.

Franco says that while concerns surrounding short-term inflation eased, the uncertainty continues to erode widespread consumer confidence.

“Consumer confidence is still high by historical levels—enough to support further growth in the near-term—but the Index has now fallen 19.6 points from the recent peak of 128.9 reached in June,” she stated. “These back-to-back declines suggest consumers have grown more cautious and are likely to curtail spending going forward.”

These numbers come ahead of the U.S. Department of Labor’s employment report, set to be released this Friday. Job growth recorded in August was a dismal low, putting renewed pressure on President Biden to deliver economic growth amid the pandemic and its lingering economic constraints.