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Thursday, February 2, 2023

Consumer Confidence Drops to 7-Month Low as Expectations Grow Dimmer

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U.S. consumer confidence declined for the third straight month in September, indicating that consumers have grown more cautious and are likely to pull back on spending.

The Conference Board said Tuesday that its consumer confidence index fell to a reading of 109.3 in September from 115.2 in August.

Economists had expected confidence to rise one point from the initially reported July level to 114.8. The previous month’s confidence level, previously reported at 113.8, was revised up to 115.2.

“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,” said Lynn Franco, Senior Director of Economic Indicators at the Conference Board.

September’s reading is the lowest level for the index since February.

Consumer views of both the present situation and expectations for the near-term future dimmed.

The share of consumers saying business conditions are good fell nine-tenths of a point to 19.3 percent. The share saying things are bad rose to 25.4 percent from 24.1 percent. The portion saying they expect improvement in business conditions six months from now fell to 21.5 percent from 23.4 percent. The share saying they expect business conditions to worsen rose to 17.6 from 17.4 percent.

Consumers are more positive about the labor market, reflecting the huge number of job openings. The share saying jobs are plentiful rose three-tenths of a percentage point to 55.9 percent. The share saying jobs are hard to find, however, also rose, from 11.2 percent to 13.4 percent.  Asked about expectations for jobs six months from now, the share expecting more fell to 21.5 percent from 23.1 percent. The share expecting fewer jobs rose to 20.3 percent from 18 percent a month ago.

“Short-term inflation concerns eased somewhat, but remain elevated. 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. These back-to-back declines suggest consumers have grown more cautious and are likely to curtail spending going forward,” Franco said.

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