September 24, 2019 Reading Time: 2 minutes

The Consumer Confidence Index from The Conference Board fell in September, decreasing by 9.1 points to 125.1. The index is constructed so that it equals 100 in 1985. Overall consumer confidence is just 0.2 points above the March 2017 reading of 124.9, trending essentially flat over the last two-and-a-half years, averaging 127.1 (see top chart). Compared to history, the level of the index remains high.

Both components of the index posted declines for the month. The present-situation component fell 7.0 points to 169.0, versus a 30-month average of 161.1, while the expectations component lost 10.6 points, taking it to 95.5 from 106.4 in the prior month. This index has also been trending sideways over the last two-and-a-half years, averaging 104.4 over the last 30 months.

According to The Conference Board, “Consumers were less positive in their assessment of current conditions and their expectations regarding the short-term outlook also weakened. The escalation in trade and tariff tensions in late August appears to have rattled consumers. However, this pattern of uncertainty and volatility has persisted for much of the year and it appears confidence is plateauing. While confidence could continue hovering around current levels for months to come, at some point this continued uncertainty will begin to diminish consumers’ confidence in the expansion.”

Overall, consumer attitudes remain at historically favorable levels, supported by a strong labor market. The net percentage of survey respondents saying jobs were hard to get fell to 11.6 in September, the lowest since 2000 (see bottom chart). Conversely, the net percentage that says jobs were plentiful also fell, dropping to a still-strong 44.8 percent (see bottom chart). The spread between those two measures, called the labor market gap, fell to 33.2 percent, a very strong reading. Despite the solid labor market, incoherent policies and ongoing trade wars are likely weighing on consumer attitudes and could potentially sharply impact attitudes and consumer spending in the future.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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