Consumer confidence in the U.S. has dropped to its lowest point in three years, according to new data from The Conference Board.
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The board's Consumer Confidence Index fell nearly seven points to 98.7 in September, the biggest one-month drop since 2021.
The Present Situation Index — based on consumers' assessment of current business and labor market conditions — fell by 10.3 points to 124.3. The Expectations Index — based on consumers' short-term outlook for income, business, and labor market conditions — declined by 4.6 points to 81.7, but remained above 80. A reading below the threshold of 80 usually signals a recession ahead.
"Consumer confidence dropped in September to near the bottom of the narrow range that has prevailed over the past two years," Dana Peterson, chief economist at The Conference Board, said in a statement. "September's decline was the largest since August 2021 and all five components of the Index deteriorated. Consumers' assessments of current business conditions turned negative while views of the current labor market situation softened further."
The report found consumers were also "more pessimistic about future labor market conditions and less positive about future business conditions and future income."
The drop in confidence was steepest for consumers aged 35 to 54. As a result, on a six-month moving average basis, the 35–54 age group has become the least confident while consumers under 35 remain the most confident, according to the report.
Confidence declined in September across most income groups, with consumers earning less than $50,000 experiencing the largest decrease. On a six-month moving average basis, consumers earning over $100,000 remained the most confident.
"The deterioration across the Index’s main components likely reflected consumers concerns about the labor market and reactions to fewer hours, slower payroll increases, fewer job openings—even if the labor market remains quite healthy, with low unemployment, few layoffs and elevated wages," Peterson added. "The proportion of consumers anticipating a recession over the next 12 months remained low but there was a slight uptick in the percentage of consumers believing the economy was already in recession."
The share of consumers expecting higher interest rates over the next 12 months dropped for the fourth month in a row to 46.5% — the lowest since February 2024. The share expecting lower rates increased to 33.3%, the highest since April 2020.
Despite slower overall inflation and declines in some goods prices, average 12-month inflation expectations increased to 5.2% in September. Still, this measure remains well below the peak of 7.9% reached in March 2022.
"Mentions of prices and inflation continued to top write-in responses as topics affecting consumers' views of the economy, but there was some increase in respondents mentioning lower inflation," the report noted.
While still positive, consumers' assessments of their family's financial situation, both current and expected over the next six months, weakened in September compared to August.
"Against this backdrop, consumer buying plans for big-ticket appliances were mixed and plans to buy a smartphone or laptop/PC in the next six months eased. However, on a six-month moving average basis, purchasing plans for homes and new cars improved slightly," the report pointed out. "When asked about plans to buy more goods or services over the next six months, consumers showed a slightly greater preference for purchasing goods."
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