Consumer Sentiment Softens; Business Optimism Continues To Erode
Consumer confidence continued its slide in September. The Conference Board Consumer Confidence Index declined last month, following decreases in both July and August. The Index reached 109.3 in September, down from 115.2 in August.
The Conference Board’s Present Situation Index—based on consumers’ assessment of current business and labor market conditions—fell to 143.4 in September from 148.9 in August. The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—fell to 86.6 from 92.8.
“Consumer confidence dropped in September as the spread of the Delta variant continued to dampen optimism,” says 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. 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.”
Consumers’ appraisal of current business conditions declined in September. Last month, 19.3 percent of consumers said business conditions were “good,” down from 20.2 percent the previous month. Additionally, 25.4 percent of consumers said business conditions were “bad,” up from 24.1 percent. Their assessment of the labor market was mixed, with 55.9 percent of consumers saying jobs were “plentiful,” up from 55.6 percent, but 13.4 percent of consumers said jobs were “hard to get,” representing an increase from August’s 11.2 percent.
Optimism about the short-term business conditions outlook eroded further in September. The Conference Board found that 21.5 percent of consumers expect business conditions will improve, down from 23.4 percent in August, while 17.6 percent expect business conditions to worsen, up from 17.4 percent. Consumers were also less optimistic about the short-term labor market outlook, with 21.5 percent of consumers expecting more jobs to be available in the months ahead, down from 23.1 percent and 20.3 percent anticipating fewer jobs, up from 18 percent. They were slightly less positive about their short-term financial prospects as well. The survey found that 17.3 percent of consumers expect their incomes to increase, down from 18.2 percent, and 11.5 percent expect their incomes to decrease, up from 9.9 percent.