Consumer confidence experienced a decline in September, influenced by uncertainties surrounding an impending federal government shutdown. According to the latest report from the Conference Board, the consumer confidence index fell to a reading of 94.2, marking a 3.6-point decrease from August and falling short of the Dow Jones estimate of 96.0. This figure represents the lowest level of consumer confidence since April, coinciding with the federal government’s plans to close nonessential operations at midnight.
The report revealed significant weaknesses in the index, particularly in the “present situation” category, which dropped to its lowest point in a year. Stephanie Guichard, a senior economist at the Conference Board, noted that consumers’ views of business conditions have dimmed compared to recent months. Additionally, their perceptions of job availability have continued to decline for the ninth consecutive month, reaching a multiyear low.
Despite the overall labor market showing considerable weakness this year, the Bureau of Labor Statistics (BLS) reported a slight improvement in job openings in August. The total number of job openings rose to 7.23 million, an increase of 19,000 from July, although this figure is 422,000, or 5.5%, lower than a year earlier. The BLS’s Job Openings and Labor Turnover report indicated a slowdown in both hiring and employee separations. Notably, the number of workers voluntarily leaving their jobs—a sign of job confidence—decreased by 75,000.
As the Federal Reserve considers its next interest rate decision, the stability of the labor market remains a critical factor. Markets largely anticipate a reduction of the benchmark borrowing rate by half a percentage point by the end of the year, with expected cuts in both October and December. Boston Fed President Susan Collins remarked that while she does not foresee a significant further softening of the labor market, there are risks, particularly regarding labor demand potentially falling short of supply, which could lead to a notable rise in the unemployment rate.
If the government funding impasse is resolved by Friday, the BLS anticipates reporting a payroll growth of 51,000 for September, an increase from a mere 22,000 in August. The Conference Board’s report also highlighted a growing divergence in job market perceptions. The proportion of respondents who viewed jobs as “plentiful” decreased to 26.9%, a drop of more than 3 percentage points from August, while the proportion deeming jobs “hard to get” remained unchanged at 19.1%. Moreover, respondents expressed increased pessimism regarding their financial situations, with perceptions about current financial health experiencing the largest monthly decline since the question was first introduced in July 2022.
