Index Drops to Lowest Level Since April
Consumer confidence declined in September as Americans grew more anxious ahead of a potential government shutdown, according to new data from the Conference Board released Tuesday. The organization’s headline confidence index fell to 94.2, down 3.6 points from August and below economists’ expectations of 96.0. The figure marks the lowest reading since April, reflecting growing uncertainty about economic and political stability as nonessential federal operations prepare to close.
The board’s “present situation” index, which measures current business and labor conditions, also dropped to its lowest level in a year. “Consumers’ assessment of business conditions was much less positive than in recent months, while their appraisal of current job availability fell for the ninth straight month,” said Stephanie Guichard, senior economist for global indicators at the Conference Board.
Job Openings and Labor Market Outlook
The decline in confidence mirrors signs of a slowing labor market. The Bureau of Labor Statistics (BLS), in what could be its final report before a potential data blackout caused by the shutdown, reported 7.23 million job openings in August—slightly higher than July but down 5.5% from a year earlier. The Job Openings and Labor Turnover Survey (JOLTS) showed decreases in both hiring and separations, while the number of voluntary quits—a key measure of worker confidence—fell by 75,000.
Boston Federal Reserve President Susan Collins noted that while she does not expect the labor market to deteriorate significantly, risks remain. “I see some increased risk that labor demand may fall significantly short of supply, leading to a more meaningful and unwelcome increase in the unemployment rate,” she said Tuesday.
Economic Uncertainty and Interest Rate Expectations
The Federal Reserve is closely monitoring labor data to determine its next moves on interest rates. Markets currently expect the central bank to cut its benchmark rate by half a percentage point before the end of the year, with reductions anticipated at the October and December meetings. However, the ongoing fiscal impasse could complicate decision-making by delaying critical economic reports.
If the government reaches a funding agreement by Friday, the BLS is expected to report payroll growth of about 51,000 jobs for September, a modest rebound from the 22,000 added in August. Yet even that pace would signal ongoing weakness in hiring compared with earlier in the year.
Household Sentiment Weakens Further
The Conference Board survey revealed a widening divide in public perceptions of job availability. The share of respondents saying jobs are “plentiful” fell to 26.9%, down more than three percentage points from August, while those saying jobs are “hard to get” remained flat at 19.1%. The report also found a sharp rise in financial pessimism: consumers’ views of their personal finances saw the steepest monthly decline since the question was first introduced in mid-2022.
The downturn in sentiment underscores the economic fragility underlying the current political gridlock. With a government shutdown threatening to delay key data and disrupt public services, both investors and consumers are bracing for a period of greater uncertainty in the months ahead.
