Consumer Confidence Index Declines to Lowest Level Since 2014

WASHINGTON (AP) — Americans' confidence in the economy decreased to the lowest level in over a decade this month, as prices remain high and wages stagnate amid the ongoing conflict in Iran. The Conference Board reported on Tuesday that its consumer confidence index fell 6.7 points to 81.9 in September, down from 88.6 in August. This marks the lowest reading since April 2014 and is below the lowest level recorded during the pandemic. Respondents' assessments of their current situation dropped by 7.9 points to 109.3, while their short-term outlook declined by 5.9 points to 63.6. Many respondents expressed concerns about the economy, citing the high costs of gas, goods, and services. Dana Peterson, the Conference Board's chief economist, stated, "The Consumer Confidence Index deteriorated notably in September, following two prior months of softening," noting that consumer views of current business conditions turned negative for the first time since September 2024. President Donald Trump has attributed high prices to his predecessor, Democrat Joe Biden, despite inflation rising since Trump's inauguration last year. Earlier this month, the government reported that consumer inflation accelerated, with gas prices increasing as the conflict in the Middle East continues. The consumer price index rose 3.4% last month compared to a year ago, according to the Labor Department, with a month-to-month increase of 0.4% from July. The Federal Reserve raised its benchmark interest rate for the first time since 2023 in an effort to combat persistent inflation, indicating that another rate hike could occur later this year. The recent quarter-point increase raised the Fed's key rate to approximately 3.9%, which may lead to higher borrowing costs for mortgages, auto loans, and credit cards. Gasoline prices currently average $4.46 per gallon, with other costs, including appliances and car repairs, also rising in August. The personal consumption expenditures price index, a preferred inflation measure by the Federal Reserve, was up 3.7% in June from a year earlier, down from May's 4.1% increase but up from 2.8% before the Iran conflict began on February 28. Consumers' perceptions of the labor market worsened in September but remained positive overall. Respondents generally expected their household incomes to increase, though not as significantly as in previous months. The U.S. labor market showed signs of recovery in August, with employers adding 162,000 jobs, while the unemployment rate held steady at 4.1%. However, this stability may be partly due to many individuals ceasing their job searches in prior months. Inflation has been a significant topic of discussion this year, with modest pay increases making rising prices more challenging for many. Average hourly wages rose 3.1% last month compared to a year earlier, marking the weakest year-over-year increase since May 2021. The government is set to release its September jobs report on Friday.