The Conference Board’s Consumer Confidence Index fell 9.1 points to 125.1 in September from 134.2 in August. Consumers’ worries about both the present (169.0 in September from 176.0 in August) and six months from now (95.8 in September after 106.4 in August) both reflected concerns that the labor market was in worse shape than it has been. The readings do not suggest that consumers aren’t confident, just that they feeling more keenly the effects of erratic trade policy in the present and are more concerned that the economy will face a substantive downturn.
All five components that make up the index were down in August. The largest negative contributions came from expectations for business conditions and for future employment, followed by present business conditions. Consumers weren’t quite so negative about the present employment and expectations for rising incomes, but the doubts were visible there as well.
A one-month drop in the index isn’t necessarily the start of a trend. However, so far in 2019 confidence was shaken at the start of the year during the federal government shut down and has been up and down with the vagaries of the outlook for trade policy. I would not look for an immediate pull back in consumer spending related to falling confidence, but any further indications that growth might turn to contraction — and consequent impact on jobs — could lead consumers to become more cautious just in time for the holidays.
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