Rising gas prices and high interest rates contributed to greater economic uncertainty and dampened consumer confidence in September, dropping the key economic indicator to the lowest level in four months, according to data released Tuesday.
The Conference Board's Consumer Confidence Index fell for a second consecutive month, dropping to 103 in September from an upwardly revised 108.7 the month before. The index is at its second-lowest level this year, landing just above May's 102.5 reading, according to Conference Board data.
"Consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular," said Dana Peterson, chief economist at the Conference Board, in a statement. "Consumers also expressed concerns about the political situation and higher interest rates. The decline in consumer confidence was evident across all age groups, and notably among consumers with household incomes of $50,000 or more."
The business organization's "Expectations Index" fell back below 80 — a threshold that often signifies a recession is imminent — to 73.7, reflecting less confidence about future business conditions, job availability and incomes, Peterson noted.
"Consumers may be hearing more bad news about corporate earnings, while job openings are narrowing, and interest rates continue to rise — making big-ticket items more expensive," she said. "Expectations for interest rates declined in September after surging in the prior month, but the outlook for stock prices continued to fall."
The share of consumers surveyed who believe a recession is "somewhat likely" or "very likely" to occur rose in September after dropping in August.
Consumers are facing rising headwinds as still-high inflation continues to bite along with decades-high interest rates, mounting credit card debt, a slowing labor market and the return of student loan payments.
The latest reading from the Conference Board reinforces expectations for consumers to pull back on spending in the fourth quarter of this year, wrote Matthew Martin, US economist for Oxford Economics, in comment issued Tuesday.
Consumer spending serves as a critical driver for US economic growth.
