US consumer confidence near 12.5-year low amid labour market fears
households expect a deterioration in business and labour market conditions over the next six months.
U.S. consumer confidence hit a near 12½-year low in September, according to the Conference Board survey released on September 29. Households are anticipating worsening business and labor market conditions over the next six months due to factors such as the Middle East conflict and rising interest rates. This comes as the U.S.-Israeli war has led to higher energy prices, contributing to inflation and prompting the Federal Reserve to raise interest rates for the first time in three years in September.
The Consumer Confidence Index fell by 6.7 points in September to 81.9, the lowest level since April 2014. Economists had predicted the index to be at 89.2. Consumer confidence was low across different demographics, including party affiliation, age, and income groups. The share of consumers believing jobs are plentiful dropped to 23.6%, the lowest since February 2021, while the proportion viewing jobs as hard to get rose to 21.9%, the highest since January 2021.
The labor market differential, which correlates closely with the unemployment rate, narrowed to 1.7% from 4.2% in August. Despite a slight acceleration in job growth in August, hiring remains tepid, and job openings dropped by 256,000 to 7.079 million in August. The ratio of job openings to unemployed persons fell to 1.0%, down from 1.06 in July.
Small businesses, with fewer than nine employees, accounted for all the decline in job openings. Hiring increased by 46,000 to 5.192 million, mostly in state and local government, while construction hiring fell by 50,000. Layoffs and discharges dropped to a 17-month low of 1.641 million. The Federal Housing Finance Agency reported a 0.3% rise in single-family home prices in July, following a 2.6% increase over the past year, adding to the challenges faced by many young adults in homeownership due to rising mortgage rates triggered by the Middle East conflict.
The Federal Reserve raised its benchmark interest rate by 25 basis points to the 3.75%-4.00% range, signaling further hikes ahead.
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