Economists note that the drop in consumer confidence could signal potential headwinds for holiday spending
The Conference Board released its survey on Tuesday, which showed that US consumer confidence plunged 6.7 points to 81.9 in September, its lowest level since April 2014.
The decline comes as Americans face higher fuel costs, an ongoing Middle East conflict and tighter financial conditions following the Federal Reserve’s recent rate hike, which pushed its benchmark rate to 3.75%-4%.
A parallel University of Michigan survey also showed declining consumer sentiment. It comes just ahead of the November 3 midterm elections.
The labor market also showed signs of cooling. The Conference Board’s labor-market differential narrowed 2.5 percentage points to 1.7%.
The share of consumers who said jobs were “plentiful” fell from 24.5% to 23.6%, while those who said jobs were “hard to get” rose from 20.3% to 21.9%.
Meanwhile, 68.4% of consumers expect interest rates to rise over the next 12 months, up 5.2 percentage points.
Economists note that the drop in consumer confidence could signal potential headwinds for holiday spending.