U.S. consumer confidence dropped in September for the third consecutive month amid concerns over the Delta variant and higher prices.
The Conference Board’s Consumer Confidence Index fell to 109.3 in September, down from 115.2 in August. ThePresent Situation Index— based on consumers’ assessment of current business and labor market conditions — fell to 143.4 from 148.9 last month. The Expectations Index— based on consumers’ short-term outlook for income, business, and labor market conditions —fell to 86.6 from 92.8.
“Consumer confidence dropped in September as the spread of the Delta variant continued to dampen optimism,” said Lynn Franco, senior director of economic indicators at The Conference Board. “Concerns about the state of the economy and short-term growth prospects deepened, while spending intentions for homes, autos, and major appliances all retreated again. Short-term inflation concerns eased somewhat, but remain elevated.”
Franco noted that consumer confidence is still high by historical levels—enough to support further growth in the near-term—but the Index has now fallen 19.6 points from the recent peak of 128.9 reached in June.
“These back-to-back declines suggest consumers have grown more cautious and are likely to curtail spending going forward,” he said.
The findings suggest headwinds may be forming as retailers ramp up for what is expected to be one of the busiest holiday seasons in years. Deloitte has forecast that total holiday retail sales are likely to increase between 7% and 9% this year. AlixPartners’ 2021 US Retail Holiday-Outlook Surveyis even more bullish, forecasting an increase of 10% to 13%
Here are other findings from The Conference Board’s September report.
Consumers’ appraisal of current business conditions declined in September, with 19.3% of consumers saying business conditions are “good,” down from 20.2%. Also, 25.4% of consumers said business conditions are “bad,” up from 24.1%.
Consumers’ assessment of the labor market was mixed, with 55.9% of consumers sayings jobs are “plentiful,” up from 55.6%. Conversely, 13.4% of consumers said jobs are “hard to get,” up from 11.2%.
Expectations Six-Months Out
Consumers’ optimism about the short-term business conditions outlook eroded further in September, with 21.5% of consumers expecting business conditions to improve, down from 23.4%.
17.6% expect business conditions to worsen, up from 17.4%.
Consumers were also less optimistic about the short-term labor market outlook, with 21.5% of consumers expecting more jobs to be available in the months ahead, down from 23.1%.
Consumers were slightly less positive about their short-term financial prospects, with 17.3% of consumers expecting their incomes to increase, down from 18.2%. And 11.5% expect their incomes will decrease, up from 9.9%.