Americans are feeling shakier about the economy. The Conference Board's headline index fell to 81.9 in September, down 6.7 points after the prior month was revised lower. That undercut all forecasts in a Bloomberg poll.
Under the hood, the present-situation gauge declined by nearly 8 points to its lowest since 2021, and the outlook for the next half year slipped to a level not seen in more than a year. The pullback spanned age groups, income brackets, and regions.
Sticker shock is still doing damage. Persistent worries about the cost of living, including pricier gasoline, are cutting into plans to make big purchases. Smaller shares of respondents said they intend to purchase cars, homes, or large household appliances. One-year inflation expectations moved higher, and the portion of consumers anticipating higher interest rates climbed to the strongest reading in more than four years.
Fuel costs are adding strain. AAA data show the war in Iran has pushed gas well above 4 dollars a gallon. US diesel prices are hovering near all-time highs, and heating oil has jumped heading into winter. "Consumers' write-in responses regarding factors affecting the economy were mostly pessimistic in September," Dana Peterson - the Conference Board's chief economist - said in a statement. "References to prices, the high cost of goods and services, and oil and gas prices in particular, rose to new heights."
Labor views softened too. The share saying jobs are plentiful dropped to the lowest since 2021, while more people said jobs are hard to get. The distance between the two measures shrank to a level not seen in over 5 1/2 years.
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Separate government data released Tuesday showed job openings fell in August to a five-month low. Income optimism faded too: the proportion who think their wages will increase in the next six months slid to the lowest since early this year, and a greater number now expect a drop.
Economists Samuel Tombs and Oliver Allen at Pantheon Macroeconomics wrote, "While higher energy prices are adding to inflationary pressure in some areas, the renewed pressure on real incomes will be a significant headwind to growth and warrants the FOMC being cautious with any further increases in the funds rate." Even so, households' outlays and job conditions have, to this point, remained resilient despite high inflation.
When confidence dips, people tend to rethink big-ticket buys, especially with fuel costs rising and income expectations weakening. That mix can cool demand over time, even if spending has proven durable lately. If you are watching prices, pay, and rates, the next few months will show whether this caution turns into a broader slowdown.
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