US consumer confidence drops to 81.9, lowest since April 2014, as fuel costs and job worries mount

American consumers turned sharply more pessimistic in September. The Conference Board said its Consumer Confidence Index fell 6.7 points to 81.9, down from 88.6 in August, the lowest reading in the survey since April 2014 and below the lowest level reached during the pandemic. The Washington Post framed it plainly: Americans now feel worse about the economy than they did during the pandemic.

The decline was broad. The Present Situation Index, which tracks views of current business and labor conditions, fell 7.9 points to 109.3, and the Expectations Index dropped 5.9 points to 63.6, its third consecutive monthly decline. The labor picture softened: 23.6% of consumers said jobs were plentiful, down from 24.5% in August, while 21.9% said jobs were hard to get, up from 20.3%, according to the Conference Board's release. Chief economist Dana Peterson said the index "deteriorated notably in September, following two prior months of softening."

Prices were the dominant theme. Peterson said references to prices, and to oil and gas prices in particular, "rose to new heights, reflecting September's surge in fuel costs". Average and median 12-month inflation expectations each rose 0.3 percentage points, to 6.1% and 5.1%, and the share of households expecting higher interest rates over the next year jumped 5.2 points to 68.4%. The backdrop is a squeeze on real incomes: consumer prices rose 3.4% from a year earlier, while average hourly wages grew 3.1%, the weakest annual gain since May 2021, and regular gasoline averages $4.46 a gallon.

For markets, the reading points to pressure on discretionary spending heading into the holiday quarter, particularly for retailers and travel names exposed to lower- and middle-income households. It also complicates the policy outlook: inflation expectations are climbing even as confidence falls, with unemployment still low at 4.1%. Upcoming retail sales, payrolls and inflation data will show whether the sentiment drop is translating into weaker actual spending.