US Consumer Confidence

Expectations Index Declined for the Second Straight Month, Sinking Back Below Recession Threshold

The Conference Board Consumer Confidence Index® declined again in September to 103.0 (1985=100), down from an upwardly revised 108.7 in August. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—rose slightly to 147.1 (1985=100) from 146.7. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—declined to 73.7 (1985=100) in September, after falling to 83.3 in August. Expectations fell back below 80—the level that historically signals a recession within the next year. Consumer fears of an impending recession also ticked back up, consistent with the short and shallow economic contraction we anticipate for the first half of 2024.

“Consumer confidence fell again in September 2023, marking two consecutive months of decline,” said Dana Peterson, Chief Economist at The Conference Board. “September’s disappointing headline number reflected another decline in the Expectations Index, as the Present Situation Index was little changed. Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular. Consumers also expressed concerns about the political situation and higher interest rates. The decline in consumer confidence was evident across all age groups, and notably among consumers with household incomes of $50,000 or more.”

Peterson added: “Assessments of the present situation were little changed overall, due to divergent views on the state of business conditions and job availability. Fewer consumers said that business conditions were good, but fewer also said they were bad. Regarding the employment situation, slightly more consumers said that jobs were “plentiful,” but also slightly more said that jobs were “hard to get.” When asked about current family financial conditions (a measure not included in calculating the Present Situation Index), the share of respondents citing a ‘good’ situation fell again, and those citing ‘bad’ conditions rose, signaling rising concerns about current family finances.

“Expectations for the next six months tumbled back below the recession threshold of 80, reflecting less confidence about future business conditions, job availability, and incomes. Consumers may be hearing more bad news about corporate earnings, while job openings are narrowing, and interest rates continue to rise—making big-ticket items more expensive. Expectations for interest rates declined in September after surging in the prior month, but the outlook for stock prices continued to fall. Notably, average 12-month inflation expectations have held steady over the past three months despite ongoing complaints about higher prices. Still, the measure of expected family financial situation, six months hence (not included in the Expectations Index) worsened further.

“The proportion of consumers saying recession is ‘somewhat’ or ‘very likely’ rose in September after dropping in August. The fluctuating soundings likely reflect ongoing uncertainty given mixed buying plans. On a six-month moving average basis, plans to purchase autos were flat but remained at an elevated level, while plans to purchase appliances continued to trend upward. But plans to buy homes—more in line with rising interest rates—continued to trend downward.”

Present Situation

Consumers’ assessment of current business conditions was slightly less pessimistic in September.

• While 20.9% of consumers said business conditions were “good,” down from 21.5 percent in August,
• 16.4% said business conditions were “bad,” down from 17.3%.

Consumers’ appraisal of the labor market was slightly more positive in September.

• 40.9% of consumers said jobs were “plentiful,” up from 39.9% in August.
• But 13.6% of consumers said jobs were “hard to get,” up from 13.2% last month.

Expectations Six Months Hence

Consumers were less optimistic about the short-term business conditions outlook in September.

• 14.1% of consumers expect business conditions to improve, down from 17.5% in August.
• Meanwhile, 18.4% expect business conditions to worsen, up from 17.3%.

Consumers’ assessment of the short-term labor market outlook wasless favorable in September.

• 15.5% of consumers expect more jobs to be available, down from 17.5% in August.
• 18.9% anticipate fewer jobs, up from 18.0%.

Consumers’ assessment of their short-term income prospects was more pessimistic in September.

• 16.3% of consumers expect their incomes to increase, down from 18.7% in August.
• Moreover, 14.4% expect their incomes will decrease, up from 11.9% last month.

Consumers’ assessment of their Family’s Current Financial Situation turned more negative in September.

Consumers’ assessment of their Family’s Expected Financial Situation, Six Months Hence softened in September.

Consumers’ Perceived Likelihood of a US Recession over the Next 12 Months rose in September.

The monthly Consumer Confidence Survey®, based on an online sample, is conducted for The Conference Board by Toluna, a technology company that delivers real-time consumer insights and market research through its innovative technology, expertise, and panel of over 36 million consumers. The cutoff date for the preliminary results was September 18.

Source: September 2023 Consumer Confidence Survey^®

The Conference Board

The Conference Board publishes the Consumer Confidence Index^® at 10 a.m. ET on the last Tuesday of every month. Subscription information and the technical notes to this series are available on The Conference Board website: https://www.conference-board.org/data/consumerdata.cfm.

About The Conference Board

The Conference Board is the member-driven think tank that delivers Trusted Insights for What’s Ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. ConferenceBoard.org.