Consumer Confidence Slides to Seven-Month Low
September 28, 2021
Consumer confidence in the U.S. fell for the third consecutive month in September, as concerns about the continued spread of Covid and worries about inflation dragged down Americans’ view of the economy.
The Conference Board’s consumer confidence index fell to 109.3 in September, down from a revised 115.2 in August. Economists polled by the Wall Street Journal expected the index to come in at 114.9. This marks the lowest reading since February.
Consumers’ concerns about the current state of the economy and their worries about short-term growth both deepened in September. Intentions to spend on big-ticket items like home appliances and automobiles also fell again. Expectations for short-term inflation fell slightly, but remain elevated.
The present situation index, which tracks consumers’ feelings about current business and labor market conditions, fell to 143.4 for the month, down from 148.9. The expectations index, which tracks short-term expectations for personal income, business, and labor market prospects in the coming months, dropped to 86.6, down from 92.8 the previous month.
Several months of falling consumer confidence reflect the growing consensus that the economic recovery has slowed in the third quarter. GDP estimates for the quarter are mostly below 5%. The economy grew at a pace of 6.6% in the second quarter.
It should be noted, however, that consumer confidence is not always an exact indicator of consumer behavior. Confidence fell in August, but the month’s retail sales were an improvement. So it remains possible that, despite growing pessimism about the economy, consumers may still be willing to spend and generate economic growth in the final months of the year.