The Conference Board's consumer confidence index fell 6.7 points to 81.9 in September, its lowest reading since April 2014 and well below the 89.2 median forecast in a Reuters poll. The decline reflected worsening assessments of both current economic conditions and the outlook for the next six months.
Consumers' assessment of current business conditions turned negative for the first time since September 2024, while perceptions of the labour market also deteriorated, although they remained in positive territory.
The survey adds to a mixed picture for the US economy. Other recent indicators have shown resilience, but weaker job openings and declining confidence suggest that households are becoming more cautious about future income and employment conditions.
Financial markets are also reassessing the outlook for monetary policy. The Federal Reserve raised interest rates by 25 basis points earlier in September, while investors have been monitoring whether persistent inflation could require additional tightening.
New York Federal Reserve President John Williams has subsequently indicated that policymakers may need more data before deciding on another increase, tempering some market expectations for an October move.
The interaction between inflation and employment remains particularly important. Higher prices can reduce household purchasing power, while a weakening labour market could restrict income growth and increase caution over discretionary spending.
The consumer-confidence decline therefore matters beyond sentiment itself. Household spending is a major component of US economic activity, meaning a sustained deterioration in confidence could affect retail demand, services and corporate revenue expectations.
At the same time, the survey does not by itself establish that the US economy is entering a downturn. Confidence can move sharply in response to changes in prices, employment perceptions and financial conditions without immediately translating into equivalent changes in actual spending.
Markets will therefore be watching upcoming inflation and labour-market releases for confirmation of whether the weaker confidence reading reflects a broader deterioration in economic conditions.
The immediate focus is the August personal consumption expenditures inflation report and subsequent employment data, which will help policymakers assess whether price pressures and labour-market conditions warrant further changes to monetary policy.
