U.S. Consumer Sentiment Plummets... September Confidence Index at 81.9

[Mexico City = Shim Young-jae, Correspondent] The perception of the economy and employment among U.S. consumers worsened in September. The Consumer Confidence Index recorded 81.9, a decrease of 6.7 points from the previous month. Evaluations of the current economy and labor market, as well as expectations for the next six months, have also declined simultaneously.

According to the Conference Board (CB), consumers cited inflation and oil prices as major factors affecting the economy. The average expected inflation for the next 12 months rose to 6.1%. The percentage of consumers expecting job losses also increased to 28.4%.

Consumer Confidence at 81.9... Current and Future Evaluations Decline

The U.S. private economic research organization Conference Board announced on the 29th (local time) that the Consumer Confidence Index for September recorded 81.9, down 6.7 points from 88.6 in August.

According to the Conference Board, the Present Situation Index, which reflects consumer evaluations of the current economy and labor market, fell by 7.9 points to 109.3.

The Expectations Index, which indicates short-term outlooks for income, economy, and labor market, recorded a decrease of 5.9 points to 63.6. This marks three consecutive months of decline.

The preliminary survey was conducted from September 1 to 23. The survey period included the federal funds rate hike and geopolitical tensions.

Dana Peterson, Chief Economist at the Conference Board, stated, "Following a weakening in the previous two months, the Consumer Confidence Index for September has clearly deteriorated," adding, "The Present Situation Index has dropped significantly, and the Expectations Index has fallen further into negative territory."

Consumer evaluations of the current business environment have also turned negative for the first time since September 2024.

The percentage of consumers who responded that the current business environment is good decreased from 18.8% in August to 18.5% in September. Conversely, the percentage who evaluated it as bad increased from 17.3% to 20.4%.

The net assessment of the current business environment, which indicates the difference between the responses of 'good' and 'bad', recorded a drop of 3.4 percentage points to minus 1.9%.

"It's Difficult to Find Jobs" 21.9%... Employment Outlook Also Deteriorates

Consumer evaluations of the labor market have also worsened.

According to the Conference Board, the percentage of consumers who responded that jobs are plentiful decreased from 24.5% in August to 23.6% in September. Conversely, the percentage who found it difficult to find jobs rose from 20.3% to 21.9%.

The labor market gap, which is the difference between these two responses, recorded a drop of 2.5 percentage points to plus 1.7. Although the current evaluation of the labor market remains in positive territory, the margin has narrowed.

The employment outlook for the next six months was even more negative. The percentage of consumers expecting job growth decreased from 14.8% in August to 14.0% in September. The percentage expecting job losses increased from 26.1% to 28.4%.

The net expectation for the labor market recorded a drop of 3.1 percentage points to minus 14.4%.

The percentage of consumers expecting an improvement in the business environment also decreased from 17.0% to 15.9%. The percentage expecting deterioration increased from 23.3% to 25.4%. The net expectation for the business environment fell to minus 9.5%, a decrease of 3.2 percentage points.

Household income expectations have also weakened.

The percentage of consumers expecting an increase in income decreased from 19.0% to 17.9%. The percentage expecting a decrease in income rose from 13.5% to 15.4%. The net expectation for income dropped by 3.0 percentage points but remained at plus 2.5.

Peterson explained that consumers expect both the business environment and the labor market to weaken over the next six months. While expectations for household income growth have been maintained, they have weakened compared to before.

Increased Price Burden... 12-Month Expected Inflation at 6.1%

Concerns about prices among consumers have also grown.

According to the Conference Board, the average expected inflation for the next 12 months recorded 6.1%, an increase of 0.3 percentage points from the previous month. The median expected inflation also rose by 0.3 percentage points to 5.1%.

The percentage of consumers expecting interest rates to rise over the next 12 months surged by 5.2 percentage points to 68.4%.

Regarding stock prices, expectations for an increase over the next 12 months remain dominant, but optimistic views have weakened in September.

According to Peterson, in a survey that asked consumers to directly write down factors affecting the economy, responses were generally pessimistic.

There was an increase in responses mentioning prices and high costs of goods and services. In particular, mentions of oil and gasoline prices have risen to new highs, reflecting the surge in fuel costs in September.

While mentions of wars and conflicts decreased compared to the previous month, they remain at high levels. Political issues, trade, and employment were also frequently mentioned factors by consumers.

Household Financial Assessment Also Turns Negative... Concerns About Recession Widen

The net assessment of consumers regarding their current household financial situation has turned negative in September.

The percentage of consumers who responded that their financial situation is bad has surpassed those who responded that it is good. This is the second time since the Conference Board introduced this question four years ago.

The outlook for household financial situations over the next six months has also become less optimistic than before. The percentage of consumers who believe there is some possibility of a recession in the U.S. within the next 12 months has increased. The percentage who believe the possibility of a recession is low has decreased. These items are not included in the calculation of the Consumer Confidence Index.

On a six-month moving average basis, consumer confidence has shown a downward trend across all age groups and nearly all income levels. While high-income groups generally maintain a more optimistic attitude, consumer confidence among households earning between $125,000 and $149,000 has seen the largest decline over the past six months.

By generation, Generation Z and Millennials have relatively the highest confidence levels. Confidence continues to weaken among Generation X, Baby Boomers, and the Silent Generation.

In September, consumer confidence declined across all political affiliations, including Democrats, Republicans, and independents.

Plans for Car and Home Purchases Decrease... Travel Slightly Increases

Cautious attitudes have also emerged in spending plans.

On a six-month moving average basis, plans for car and home purchases slightly decreased in September. Among durable goods, the items consumers most want to purchase in the next six months are furniture and smartphones.

Plans for purchasing refrigerators and TVs saw the largest declines, while plans for other durable goods also decreased slightly.

Plans for service expenditures also decreased again in September. The top five service areas where consumers planned to spend include restaurants, bars, takeout food, streaming, internet, mobile services, beauty, personal care, utilities, and healthcare.

Plans for discretionary spending on personal travel, hotels, movies, airline tickets, and amusement parks decreased. In contrast, plans for spending on home maintenance, financial services, historical sites, and museums slightly increased.

Overall, while service expenditure plans have decreased, vacation plans have been maintained. The percentage of consumers planning a vacation in the next six months is 42.6%, an increase of 0.5 percentage points from August.

However, the increase is limited to domestic travel. Plans for overseas travel decreased in September.

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