US Consumer Confidence Hits Decade Low as Economic Woes Mount

Consumer confidence in the U.S. economy has fallen to its lowest level in over a decade, according to data released this month, as persistent inflation and stagnant wages weigh on households. The Conference Board's consumer confidence index dropped to 81.9 in September, a significant decrease from 88.6 in August and the lowest reading since April 2014.

Respondents expressed significant pessimism regarding both their current situation and their short-term economic outlook. Many cited the high cost of gasoline, goods, and services in their responses to the survey, which was conducted between September 1 and September 23. This sentiment could pose a challenge for President Donald Trump and Republicans in the upcoming midterm elections, scheduled for just over a month away.

Adding to economic concerns, the average long-term U.S. mortgage rate surged this week to its highest point in nearly three years. The benchmark 30-year fixed-rate mortgage climbed to 7.28% from 7.03% last week, marking the largest weekly increase in several years. This is the sixth consecutive week of rising mortgage rates, with the average rate now at its highest since November 22, 2023, when it stood at 7.29%. Borrowing costs for 15-year fixed-rate mortgages also increased, with the average rate rising to 6.60% from 6.42% a week prior.

In the labor market, U.S. employers added only 29,000 jobs last month, a disappointing figure that fell short of economists' expectations of around 90,000. The unemployment rate edged up to 4.2% from 4.1% in August. Revisions to previous months' data also reduced combined job gains for July and August by 60,000. Furthermore, average hourly wages saw their smallest year-over-year increase since May 2021, rising just 3% compared to a year ago.

Despite these figures, the broader U.S. labor market remains resilient. Employers posted fewer job openings in August, with the number falling to 7.08 million from a revised 7.34 million in July. This was below the 7.2 million openings anticipated by forecasters and the lowest level since March. The latest Job Openings and Labor Turnover Survey also indicated a decrease in layoffs and a slight change in the number of people quitting their jobs, which is often seen as a sign of confidence in employment prospects. However, overall hiring remains considerably lower than in previous years.

Inflation, while showing signs of slowing, remains elevated. Consumer prices rose 3.4% in August compared to the previous year, below the 3.7% economists had predicted. On a monthly basis, prices increased by 0.3%, up from 0.1% in July. Core inflation, excluding volatile energy and food categories, rose 3% year-over-year and 0.2% month-over-month. The U.S. economy experienced solid growth in the second quarter, with gross domestic product expanding at a 2.2% annual pace, primarily driven by strong consumer spending and business investment. Consumer spending, which constitutes about 70% of U.S. economic activity, increased at a healthy 3.8% annual pace.