US consumer confidence hits its lowest level since 2014 ahead of midterms
US consumer confidence dropped in September to its weakest level since 2014, with households citing rising prices for goods and fuel as the main reasons, according to The Conference Board. The decline comes amid higher average petrol costs and after the Federal Reserve's first interest-rate increase in three years.
Why It Matters
A sharp fall in consumer sentiment less than six weeks before the midterm elections could influence voter perceptions of the economy and add pressure on policymakers as the Fed weighs further rate moves. Rising fuel and goods prices also feed into inflation measures the Fed monitors, such as the PCE index.
Key Facts
- Lowest consumer confidence since: 2014
- Source: The Conference Board monthly consumer confidence report
- Average petrol price (AAA) on Tuesday: $4.45 per gallon
- Average petrol price one month earlier: $4.08 per gallon
- PCE index (June year-over-year): up 3.7 percent
US consumer sentiment deteriorated markedly in September, with The Conference Board reporting the Consumer Confidence Index fell to its weakest level since 2014. The board said the drop followed two months of easing and identified higher costs for goods and services as the principal driver of the decline. Rising fuel expenses were singled out by consumers as a major factor. The American Automobile Association (AAA) reported the national average price for a gallon of petrol increased by 37 cents over the past month, reaching $4.45 on Tuesday compared with $4.08 a month earlier. Conference Board economists also noted that oil and gas prices surged in September and that mentions of global conflict remained elevated. The report arrives a day before the Commerce Department's personal consumption expenditures (PCE) index release, a key inflation gauge for the Federal Reserve; the PCE was up 3.7% year-over-year in June. Earlier this month the Fed raised interest rates for the first time in three years, a move that has increased borrowing costs for consumer credit products and auto and bank loans, and it will make another policy decision at its Oct. 27-28 meeting. Consumer confidence fell across political lines in the latest reading, the Conference Board said. Public polling cited in the report suggested partisan perceptions of economic stewardship differ — a Marist poll found 42% of respondents said the Democratic Party would handle the economy better, while 34% favored the Republican Party. US equity indexes were slightly lower as the trading day ended, with the Nasdaq down 0.08%, the Dow down 0.2% and the S&P 500 down 0.1%. These developments come just over a month before the congressional midterm elections, making shifts in consumer sentiment and inflation data particularly salient for voters and policymakers alike.
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