Consumer confidence drops in September amid inflation and labor market concerns

Consumer sentiment fell sharply in September as an inflation-weary public took a dimmer view on the labor market and the impact higher prices would have on their finances, the Conference Board reported Tuesday.

The board's Consumer Confidence Index tumbled to 81.9, a decline of 6.7 points and a reading well below the Dow Jones consensus forecast for 89.

Respondents cited concerns over inflation and the jobs outlook. For the first time in the four-year history of the survey question, more respondents said their personal finances bad as opposed to good.

"Consumer appraisals of current business conditions became negative for the first time since September 2024," said Dana Peterson, the Conference Board's chief economist.

"Consumers' write-in responses regarding factors affecting the economy were mostly pessimistic in September," she added. "References to prices, the high cost of goods and services, and oil and gas prices in particular, rose to new heights, reflecting September's surge in fuel costs."

Other readings showed similar deterioration: The board's Present Situation index fell 7.9 points to 109.3, while the Expectations Index, a six-month outlook window, slipped 5.9 points to 63.6.

On the labor front, the differential between those saying jobs are "plentiful" against "hard to get," a closely watched barometer of labor market health, eroded further, down 2.5 percentage points to just 1.7%.

Those results came against rising inflation expectations, pushed by continued uncertainty over the Iran war, which has been reflected in financial markets by surging Treasury yields and mortgage rates.

Respondents on average expect an inflation rate of 6.1%, an increase of 0.3 percentage points from August. The median expectation also rose 0.3 points to 5.1%.

The Conference Board's reading is in keeping with similar surveys. The University of Michigan's consumer survey showed sentiment fell 7% in September to its second-lowest reading on record.

In other economic news Tuesday, job openings in August edged lower to 7.08 million, down 256,000 for the month amid sharp declines in professional and business services as well as health care-related jobs, the Bureau of Labor Statistics reported. The Wall Street consensus had been for 7.2 million openings.

Hires edged higher for the month while quits were little changed and layoffs fell slightly.