Consumer Confidence Declines to Four-Month Low
Confidence among U.S. consumers declined in September to a four-month low as Americans’ views of the labor market deteriorated.
The Conference Board’s index decreased to 86 this month, weaker than the most pessimistic forecast in a Bloomberg survey of economists, from an August reading of 93.4 that was the strongest since October 2007, the New York-based private research group said Sept. 30.
The median forecast called for 92.5. The monthly decline was the biggest since October, when a partial shutdown of the federal government weighed on confidence.
Sentiment may have trouble advancing to higher levels without faster income growth that’s sustained over time, one part of the labor market that has been lagging behind. At the same time, gains this year in payrolls and higher stock prices will probably help keep household spending, which makes up almost 70% of the economy, from faltering.
“Consumers were less confident about the short-term outlook for the economy and labor market, and somewhat mixed regarding their future earnings potential,” Lynn Franco, director of economic indicators at the Conference Board, said in a statement. “All told, consumers expect economic growth to ease in the months ahead.”
Estimates of 75 economists in the Bloomberg survey ranged from 88.7 to 95 after a previously reported August reading of 92.4. The Conference Board’s measure averaged 96.8 during the last expansion and 53.7 during the recession that ended in June 2009.
“Confidence is very volatile; it can bounce around from month to month,” said Ryan Sweet, a senior economist at Moody’s Analytics. “It doesn’t really change the consumer landscape. Confidence will continue to rise as we get more job growth which will sustain more income.”
Another report showed home prices rose in the 12 months ended in July at the slowest pace in almost two years. The S&P/Case-Shiller index of property prices in 20 U.S. cities increased 6.7%, the smallest 12-month gain since November 2012. Nationally, prices rose 5.6%.
The Conference Board’s barometer of present conditions fell to 89.4 from August’s 93.9. The gauge of consumer expectations for the next six months decreased to 83.7, the lowest since May, from 93.1 a month earlier.
Other readings on sentiment have been mixed. The Thomson Reuters/University of Michigan gauge climbed in September to a 14-month high, while the weekly Bloomberg Consumer Comfort Index is at an almost four-month low.
The report showed Americans’ assessments of current labor-market conditions were more downbeat. The share of respondents who said jobs were currently plentiful fell to 15.1% from 17.6%.
The difference between those who said employment opportunities were plentiful and those saying jobs were hard to get decreased from August, when it was the biggest since May 2008.
Fewer consumers expected more jobs to become available in the next six months as the share dropped to 15.2%, the smallest since May.
Payrolls climbed 142,000 in August after a 212,000 gain the prior month, figures from the Labor Department showed earlier this month. The unemployment rate dropped to an almost six-year low of 6.1%.
