Consumer confidence declined in September, pointing to a difficult economic picture in the run-up to a possible federal government shutdown. Today, The Conference Board released its latest consumer confidence numbers. The headline confidence index dropped, showing a reading of 94.2. This figure fell by 3.6 points from August’s reading. It was well below the Dow Jones prediction of 96.0.
Looking ahead to November, the decline in confidence is especially surprising given it represents the lowest reading since April. That data comes at a particularly important time. It arrives only hours before nonessential government operations are scheduled to cease at midnight due to the forthcoming shutdown. Whether it’s the TSA or other government services, this uncertainty in government functions can deepen consumer sentiment, which has already started to show cracks.
Even more troubling, the “present situation” index recently reached a new annual nadir. This indicates that consumers are becoming increasingly concerned about the current state of the economy. March’s report showed an alarming decrease in the total number of people choosing to leave their jobs — what the business world refers to as “quits.” That drop totaled 75,000 employees. This metric is often viewed as an indicator of worker confidence in finding new employment opportunities after leaving their current positions.
Even with modest gains in jobs accessibility in August over July, the job market is still precarious. Uncertainty for consumers Many consumers feel insecure over the prospects of their jobs, further adding to their hesitance to spend.
Stephanie Guichard is senior economist, global indicators, at The Conference Board. Her discussion was a useful primer on understanding the new consumer confidence data.
“Consumers’ assessment of business conditions was much less positive than in recent months, while their appraisal of current job availability fell for the ninth straight month to reach a new multiyear low.” – Stephanie Guichard
As the nation nears yet another possible shutdown, the effects on consumer sentiment and economic activity more generally are less clear. Perhaps the toughest barrier to any serious economic rebound is the significantly declining consumer confidence. Plus, a much-weakened labor market will introduce even more challenges in the months ahead.