Consumer confidence dropped in September. The Conference Board's Consumer Confidence Index was 76.8, down 4.9 points from the revised 81.7 in August. This was below economists' expectations of 82.0. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
Confidence fell across both portions of the Conference Board index. The Present Conditions index decreased to 59.5 in September from 62.0 in August. This index measures how consumers perceive the current state of the economy.
The drop in the Expectations portion of the index to 88.4 was largely responsible for the overall decrease. This measure of future economic activity was down 6.5 points from August.
The University of Michigan's Consumer Sentiment Index, a comparable index, also decreased in September to 87.7 from 89.3 in August. Both component indices fell. The Present Conditions index dropped 1.3 points to 98.4 in September, while the Expectations portion fell to 80.8 from 82.5 in August.
Consumer confidence continues to fluctuate as consumers wait for economic improvement. Continued weakness in the national labor market remains the major constraint to increased consumer confidence. High debt levels, slowing wage growth and little pent-up demand also weigh on consumers.
However, consumer spending has been boosted by tax cuts, stable retail prices and low interest rates. If labor markets stabilize and the economy improves, consumer confidence should gradually build. Since consumer spending accounts for two-thirds of the U.S. economy, consumer confidence will remain a closely watched economic indicator.
Sources: www.conference-board.com
www.economy.com
