- U.S. consumer confidence fell to a four-month low in September, the Conference Board said Tuesday.
- This is a sign that Americans are doing worse when it comes to the economy.
- Their bleaker outlook comes with still-high inflation and the Fed’s announcement that it will keep interest rates high.
Americans remain sour on the economy as inflation remains high and the Federal Reserve is expected to keep interest rates high well into 2024.
The U.S. consumer confidence index, which measures how people feel about their own financial health and purchasing power, fell to a four-month low in September, the Conference Board said Tuesday.
The reading fell to 103.0 from 108.7 in August, well below the 105.5 that economists polled by Reuters had expected.
According to the Conference Board, self-confidence has fallen across all age groups, with the decline most pronounced among Americans earning more than $50,000 a year.
Their bleaker outlook may be due to continued increases in the cost of living – the consumer price index showed price growth accelerating in both July and August – and signals from the Fed that it will keep borrowing costs high to keep inflation at bay Target of 2% reduction.
The data also showed that fewer Americans believe they can buy a home. According to the St. Louis Federal Reserve, the Fed’s aggressive tightening campaign has pushed the average 30-year fixed-rate mortgage to a 22-year high of 7.2%.
Despite the pessimism, there are signs that the economy is doing well: Second-quarter growth exceeded forecasters’ expectations and the unemployment rate is still holding steady below 4%.
However, the stream of positive data hasn’t trickled down to consumers — and Wall Street is also worried about several one-time factors that could rattle the economy as 2023 progresses.
Student loans, labor strikes and a looming government shutdown could slow growth in the fourth quarter, Goldman Sachs warned earlier this month.
The bank – which says there is only a 1 in 7 chance of a U.S. recession in the next 12 months – expects the three factors to cause the economy to grow in the three months to December 31 only grows by 0.6%.
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