US' consumer confidence drops further in September 2023: TCB

Notably, the expectations index dipped to 73.7 in September from 83.3 in August, falling below the historically significant 80-point level, often viewed as an indicator of a looming recession within a year. This correlates with an uptick in consumer fears about an impending economic downturn, aligning with the anticipated short and shallow contraction in the economy for the first half of 2024.

The present situation index, a measure based on consumers' view of current business and labour market conditions, edged up slightly to 147.1 in September, compared to 146.7 in August. While 20.9 per cent of consumers perceived business conditions as ‘good,’ down from 21.5 per cent last month, the percentage that thought conditions were ‘bad’ decreased to 16.4 per cent from 17.3 per cent. On the labour market front, 40.9 per cent said jobs were ‘plentiful,’ an improvement from 39.9 per cent in August. However, 13.6 per cent felt jobs were ‘hard to get,’ up from 13.2 per cent last month, as per the survey.

Consumer sentiment regarding short-term business conditions took a hit in September, with only 14.1 per cent expecting an improvement compared to 17.5 per cent in August. Meanwhile, 18.4 per cent expect conditions to worsen, up from 17.3 per cent. On the topic of short-term labour market expectations, 15.5 per cent anticipate more jobs being available, down from 17.5 per cent last month, and 18.9 per cent anticipate fewer jobs, an increase from 18.0 per cent.

Consumer outlook on short-term income also turned pessimistic. Only 16.3 per cent of consumers expect their incomes to rise, a decrease from 18.7 per cent in August. Additionally, 14.4 per cent believe their incomes will fall, compared to 11.9 per cent last month.

The perceived likelihood of a US recession in the next 12 months also experienced a surge in September.

"September's disappointing headline number reflected another decline in the expectations index, as the present situation index was little changed. Write-in responses showed that consumers continued to be preoccupied with rising prices in general. Consumers also expressed concerns about the political situation and higher interest rates. The decline in consumer confidence was evident across all age groups, and notably among consumers with household incomes of $50,000 or more," said Dana Peterson, chief economist at The Conference Board.

ALCHEMPro News Desk (DP)