US consumer confidence falls by most in 3 years

US consumer confidence unexpectedly fell in September by the most in three years on concerns about the labor market and the outlook for the broader economy.

The Conference Board’s gauge of sentiment decreased 6.9 points to 98.7, the biggest drop since August 2021, data out Tuesday showed. The figure was below all estimates in a Bloomberg survey of economists.

A measure of expectations for the next six months declined in September to 81.7, while present conditions dropped to 124.3.

US consumer confidence unexpectedly fell

The recent labor market slowdown, coupled with consistently high living costs, is dampening consumer confidence, leaving it significantly below pre-pandemic levels. The report highlights worries about the job market, which played a key role in the Federal Reserve’s decision to lower interest rates by 50 basis points last week.

“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,” Dana Peterson, chief economist at The Conference Board, said in a statement.

Jobs declined for a seventh month

The share of consumers that said jobs were plentiful declined for a seventh month to 30.9%, still the smallest share since March 2021. The streak of declines is the longest since 2008. The share saying jobs were hard to get rose to 18.3%, also the highest since early 2021.

Economy Connecticut’s job growth streak extended to a seventh month in July, as employment grew by a net 700 jobs.

The Department of Labor’s monthly employment report shows private sector employment grew by 1,900 (0.1%) last month to a record high 1,476,600 jobs.

The report also shows private sector wages increased 4.5% over the past 12 months, with the consumer price index up 2.9% over the same period.

US consumer confidence and its impact on the stock market

US consumer confidence significantly influences the stock market, serving as a key indicator of economic health. High consumer confidence typically leads to increased spending, which drives corporate earnings and can boost stock prices. Investors often interpret strong consumer sentiment as a signal of economic growth, leading to bullish market behavior.

Conversely, low consumer confidence can raise concerns about economic slowdown, prompting investors to sell off stocks, which may result in market declines. Therefore, tracking consumer confidence levels is essential for understanding market trends and making informed investment decisions.

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