United States consumer confidence fell in September to its lowest level since 2014, driven sharply by surging prices for everyday goods, services, and fuel just over one month before the congressional midterm elections. The Conference Board reported on Tuesday that its monthly Consumer Confidence Index deteriorated notably following two prior months of softening, as persistent inflation strains household budgets across all political affiliations.
Consumer Confidence Index Hits Lowest Level Since 2014
The latest reading from The Conference Board places consumer sentiment at a level not seen since 2014. Dana M Peterson, chief economist at The Conference Board, noted in the release that the index dropped significantly following softening trends in July and August. Consumers identified higher costs for goods and services as the primary driver behind the pessimistic outlook.
The downturn spans across political lines just as voters prepare for the upcoming congressional midterm elections, which will determine the balance of power in Washington, DC. Marist poll data indicates that 42 percent of US consumers feel the Democratic Party would handle the economy better, compared with 34 percent who favor their Republican counterparts.
Rising Fuel Costs and Economic Pressures
Higher prices at the pump contributed heavily to the monthly decline in sentiment. According to the American Automobile Association (AAA), the average price for a gallon of petrol jumped 37 cents over the past month, reaching $4.45 on Tuesday compared with $4.08 a month prior. Peterson highlighted that oil and gas prices rose to new heights, reflecting September’s severe fuel cost surge, while comments concerning war and conflict remained elevated though they eased slightly from previous months.
The consumer sentiment report arrived immediately ahead of a crucial inflation gauge monitored closely by the Federal Reserve. The personal consumption expenditures (PCE) index rose 3.7 percent in June from a year earlier. Compounding these pressures, the US central bank raised interest rates earlier in the month for the first time in three years, driving up credit card, car, and bank loan costs. The Federal Reserve is scheduled to make its next interest rate decision at its October 27-28 meeting.
Market Reaction to Declining Sentiment
Despite the sharp drop in consumer confidence and ongoing monetary tightening, US financial markets finished the trading day only slightly lower. The tech-heavy Nasdaq closed down 0.08 percent, the Dow Jones Industrial Average declined 0.2 percent, and the S&P 500 finished down 0.1 percent as investors weighed the looming economic data and political stakes.
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