US consumer confidence index plunges unexpectedly in Sep

There was an unexpected and steep decline in the US Conference Board’s consumer confidence index to 98.7 in September, down from a revised 105.6 in August. The dip supports the Federal Reserve’s decision to slash its key lending rate by 50 basis points point last week

The drop, caused by labor market concerns, indicates dampening optimism about the economy. Coming before November’s presidential election, this can prove tough for the Democratic nominee, Vice President Kamala Harris, who is fighting Republican former president Donald Trump. The reason is that the incumbent administration’s management of the economy is widely regarded as less than satisfactory, and Trump is regularly slamming the Joe Biden-Harris duo for that.

While the fall in confidence supports the Federal Reserve's decision to cut its key lending rate by half a percentage point last week, "it also will deliver a warning message about the state of the economy to financial markets," they added.

This was well below market expectations, news agency AFP reported Briefing.com as saying.

“The deterioration across the Index’s main components likely reflected consumers concerns about the labor market,” despite the jobs market actually remaining quite healthy, The Conference Board’s chief economist Dana Peterson said in a statement. “The proportion of consumers anticipating a recession over the next 12 months remained low but there was a slight uptick in the percentage of consumers believing the economy was already in recession.”

The decline in September has been the largest since August 2021, with all five components of the index falling, according to Peterson.

The biggest drop in confidence was seen among respondents between the ages of 35 and 54, and among consumers earning less than $50,000 per year.