Job worries and inflation drive sentiment

-
The Consumer Confidence Index dropped 3.6 points in September, falling to 94.2.
-
The Present Situation Index tumbled 7.0 points to 125.4, its sharpest one-month decline in a year.
-
The Expectations Index slipped to 73.4, remaining below the recession-warning threshold of 80 for the eighth consecutive month.
Consumer confidence eroded further in September, marking the lowest reading since April, as Americans grew more uneasy about current business conditions and job availability, according to data from The Conference Board.
The headline index fell to 94.2, down from 97.8 in August, reflecting mounting economic unease. While short-term expectations weakened only modestly, consumers view of present conditions plunged, with the Present Situation Index down seven points to 125.4, its steepest monthly drop since September 2024.
Consumers appraisal of the current job market fell for the ninth straight month to a new multiyear low, said Stephanie Guichard, senior economist at The Conference Board. That aligns with the steady decline in job openings. The present situation component saw its largest drop in a year.
Concern about jobs
The job market weighed heavily on consumer sentiment:
-
Just 26.9% of consumers said jobs were plentiful, down from 30.2% in August.
-
Those calling jobs hard to get held steady at 19.1%, but the overall deterioration suggests further cooling in labor demand.
At the same time, inflation reemerged as the top consumer worry. Mentions of prices rose in September, surpassing tariffs and trade concerns as the leading driver of negative sentiment. Yet inflation expectations edged slightly lower, with the average 12-month outlook dipping to 5.8% from 6.1% in August.
Demographic and political divides
Confidence moved in opposite directions across age groups:
-
Under-35 consumers grew more optimistic, while those over 35 lost confidence.
-
By income, results were mixed, with no clear pattern, though households earning between $25,000 and $35,000 and those making above $200,000 saw notable declines.
Political affiliation also played a role. Confidence improved modestly among Republicans and Democrats, but dropped sharply among Independents, suggesting a growing divide in perceptions of the economy.
Family finances take a hit
Americans views of their own finances dimmed:
-
Assessments of current financial situations recorded the steepest one-month drop since the measure began in July 2022.
-
Expectations for future finances weakened only slightly.
Meanwhile, the share of consumers who believe the U.S. is already in recession rose in September. Those who said a recession is very likely over the next year also climbed to the highest level since May.
Consumers purchasing plans were mixed in September:
-
Car buying plans weakened, both new and used.
-
Home buying intentions jumped to a four-month high.
-
Electronics purchases rose, especially smartphones and TVs, though refrigerator purchases fell.
-
Travel intentions slumped, with vacation plans hitting the lowest level since Aprildragged down by fewer plans for overseas trips.
Markets outlook: Slight uptick in optimism
Despite gloomier views on jobs and finances, consumer sentiment toward financial markets ticked up:
-
Nearly 49% expect stock prices to rise over the next year, unchanged from July and August.
-
The share expecting declines fell to 27.6%, down from 30.2%.
-
Interest rate expectations softened slightly, with fewer consumers predicting higher borrowing costs.
The bottom line
The September report suggests that while Americans are increasingly worried about the presentparticularly jobs and household financessome cling to hope for steadier income and stronger stock markets ahead. But with the Expectations Index stuck below recession-warning levels since February, economists caution that consumer resilience may continue to erode into year-end.
Consumers are growing more cautious, especially about jobs, Guichard said. With confidence at a five-month low, the risk of weaker spending in the months ahead is rising.
Posted: 2025-10-01 11:25:44