US consumer confidence took an unexpected dive in September, marking the most significant decline in three years. According to The Conference Board’s latest data, the sentiment gauge plummeted by 6.9 points to 98.7—the steepest drop since August 2021. This figure came in below all estimates from a Bloomberg survey of economists, highlighting growing concerns about the labor market and broader economic outlook.

A closer look at the report reveals that a measure of expectations for the next six months fell to 81.7, while present conditions dropped to 124.3. These numbers reflect a troubling trend: consumers are increasingly wary of both their current financial situations and future economic prospects.

Additionally, the share of consumers who believe jobs are plentiful has declined for the seventh consecutive month to 30.9%, marking the smallest share since March 2021. This streak of declines is the longest observed since 2008, signaling potential trouble ahead. Simultaneously, the percentage of individuals stating that jobs are hard to get has risen to 18.3%, reaching its highest level since early 2021.

The difference between these two metrics—a crucial indicator closely monitored by economists—has narrowed for an eighth month in a row, another record not seen since the Great Recession. This narrowing gap suggests growing unease about job availability and overall economic stability.

The recent slowdown in the labor market is a key factor behind this dip in confidence. Persistently high costs of living are also contributing to this unease, keeping consumer sentiment well below pre-pandemic levels. The details of this report echo broader concerns that influenced the Federal Reserve’s decision last week to cut interest rates by 50 basis points.

Fed Chair Jerome Powell’s recent remarks offer a reassuring perspective on the state of the labor market and the broader economy. Despite some signs of softening, Powell emphasized that the labor market remains in “solid condition” and described the overall economic landscape as “basically fine.”

In summary, while challenges remain on the horizon, Powell’s comments and recent projections suggest a resilient labor market and an economy poised for stability.

Author