Key Points

  • Consumer confidence fell to a five-month low in September, weighed down by persistent inflation, a softening labor market, and concerns about the economic outlook, the Conference Board said on Tuesday.
  • Economists noted that the share of consumers who said jobs were plentiful fell to 26.9% from 30.2%, while those saying jobs were hard to get held steady at 19.1%, indicating slowing wage growth. The Conference Board said the proportion of households expecting business conditions to improve declined, whileinflation has re-emerged as the top factor influencing consumers' economic perceptions。
  • "Consumers' assessments of business conditions are far less positive than in recent months, and their assessments of current job availability have declined for the ninth consecutive month, reaching a multi-year low," Stephanie Guichard, senior economist for global indicators at the Conference Board, said in a statement.

Deeper Analysis

Households' pessimistic views on the job market align with a government report released Tuesday, which showed hiring at 5.1 million in August, with a hiring rate of 3.2%, little changed from July.

"The job market has been frozen for nearly a year and appears to be deteriorating for job seekers," Heather Long, chief economist at Navy Federal Credit Union, said in a statement. The unemployment rate edged up 0.1 percentage point to 4.3% in August.

"Americans feel trapped in this economy, with neither job opportunities nor hope of buying a home," she said. Rising household concerns about inflation and job availability "could begin to affect spending, especially on vacations and discretionary items."

So far, households have not cut back on spending.

Data from the U.S. Bureau of Economic Analysis released last Friday showed consumer spending in Augustrose 0.4% month over month, unchanged from July, but the Federal Reserve's preferred inflation gauge—the personal consumption expenditures price index excluding volatile energy and food prices—remained at an annual rate of 2.9%.

The economy has also shown signs of resilience.

The Atlanta Federal Reserve last Friday raised itsthird-quarter economic growth estimate to an annualized 3.9%, up from 3.3% on September 17.

Nevertheless, Federal Reserve Vice Chair Philip Jefferson said Tuesday that data show economic growth has "cooled noticeably" since 2024, and pointed to the central bank facingincreasingly greater challengesin achieving Congress's dual mandate of stable prices and maximum employment.

"Job growth has slowed due to weakening labor supply growth and softening labor demand," he said in a speech.

"At the same time, higher tariffs are emerging as rising inflation on some goods," Jefferson said. "I expect the effects of tariffs on inflation, employment, and economic activity to become more apparent in the coming months."

The central bank cut its federal funds rate by 25 basis points to a range of 4% to 4.25% on September 17, citing a weak labor market, marking its first rate cut this year.

Fed officials, in their median projections, expect two more 25-basis-point rate cuts by the end of the year.

"Further modest easing of policy rates later this year may be appropriate, but the data must justify it," Boston Fed President Susan Collins said Tuesday.

"In this highly uncertain environment, I do not rule out scenarios of higher and more persistent inflation, more adverse labor market developments—or both," she said.