U.S. consumer confidence fell to its lowest level since 2014, according to data released Tuesday by the Conference Board. The research group’s Consumer Confidence Index dropped to 81.9 in September, a decline of 6.7 points from the August reading.
The decline occurred as annual inflation remained above the Federal Reserve’s 2% target for more than five years. Economists noted that recent energy price spikes, resulting from Middle Eastern shipping restrictions in the Strait of Hormuz during the ongoing Iran war, have contributed to economic pressure.
The report indicated that the Expectations Index, which measures the six-month outlook for business and labor conditions, fell by 3.2 points in September to nearly 60. Dana Peterson, chief economist at the Conference Board, stated that consumer assessments of current business conditions turned negative for the first time in two years, and appraisals of the labor market also worsened.
The scale of this shift is reflected in specific economic pressures, including energy costs impacted by a seven-month conflict in the Middle East. These costs directly affect household budgets at the gas pump and in utility bills. Additionally, the Expectations Index dipping toward 60 is a threshold that historically precedes economic weakening; a similar dip occurred last year for the first time since 2013.
The reported data sets a precedent for weakening sentiment despite a period of relatively steady economic figures. A concrete change for the public involves the assessment of the job market, which consumers now expect to weaken over the next six months. Looking ahead, the Federal Reserve continues to monitor these figures against its 2% inflation target, while the next Consumer Confidence Index update is expected in late October.