US Consumer Confidence Sours on Labour Market Jitters

• U.S. consumer confidence dropped by the most in three years in September amid mounting fears over the labour market, though more households planned to buy a home over the next six months. The Conference Board survey on Tuesday also showed consumers expected inflation to increase in the coming year, clouding their views of the economy ahead of the Nov. 5 presidential election. The economy could determine the outcome of the vote.
• The Conference Board's consumer confidence index dropped to 98.7 this month from an upwardly revised 105.6 in August. The decline was the largest since August 2021. Economists polled by Reuters forecasted the index to rise to 104.0 from the previously reported 103.3.
• The biggest drop in confidence was among the 35 to 54 years age group. Confidence fell across most income groups, with consumers earning less than $50,000 a year experiencing the biggest decrease. The Conference Board said write-in responses about politics, including the November elections, remained below both 2020 and 2016 levels.
• The unemployment rate slipped in August after rising for four straight months. It has increased from 3.4% in April 2023 to 4.2% last month. The rise in the unemployment rate has been driven by an increase in labour supply, mostly from immigration. Layoffs remain at historically low levels.
• "The deterioration across the index's main components likely reflected consumers' concerns about the labour 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," said Dana Peterson, chief economist at the Conference Board.
• Consumers' 12-month inflation expectations increased to 5.2% from 5.0% in August, though more mentioned lower inflation in their write-in responses. "If inflation expectations continue to rise and the labor market continues to soften, the Fed is going to have a difficult time appropriately recalibrating monetary policy," said Conrad DeQuadros, a senior economic advisor at Brean Capital.

(Source: Reuters)