U.S. consumer confidence has fallen to a four-month low in September due to concerns about rising prices and the possibility of a recession. The Conference Board reported a second consecutive monthly decline in confidence, which was also influenced by higher interest rates and worries about the political environment. The impending government shutdown added to these concerns, causing confidence to drop across all age groups, especially among consumers with annual incomes of $50,000 or more. Despite slowing inflation, prices remain higher than pre-pandemic levels, impacting consumer confidence.
The Conference Board’s consumer confidence index fell to 103.0 this month, the lowest reading since May. Economists had expected a decrease to 105.5. The drop in confidence was largely attributed to expectations of a government shutdown and the failure to pass spending bills to fund federal agency programs. Additionally, concerns about the political situation and rising interest rates contributed to the decline in consumer confidence.
The survey conducted by the Conference Board also revealed that consumers are increasingly worried about their family finances. Although inflation expectations for the next year remained stable, consumers expressed reluctance to purchase houses due to the high mortgage rates and accelerating home prices. However, consumer spending continues to be supported by a tight labor market and elevated wage growth. The drop in consumer confidence and the decline in new home sales reflect the challenges faced by Americans in the current economic climate.