Americans are turning out to be less optimistic about the economy as employment and business worries mount. The Conference Board’s consumer confidence index sank to 81.9 in September, the lowest level since April 2014. According to Reuters, households are expecting that business and labor conditions will deteriorate in six months.

The index fell by 6.7 points compared with August, and was below the 89.2 economists at Reuters who were surveyed for the report expected. The slide was seen among different political affiliations, ages and income levels suggesting that economic worries were not confined to any one group.

Jobs were an important concern as the percentage of respondents who said they believe jobs are plenty fell to 23.6% from 24.5% in the previous month. However, those who said jobs are hard to get were up from 20.3% in August to 21.9%. Altogether, the two categories suggest that consumers were less confident about employment opportunities.

The labor market differential, which is the difference between respondents who said jobs are plenty versus those who say jobs are hard to get, was narrower in September. It was 1.7 percentage points compared with 4.2 percentage points in August. Reuters said the differential was highly correlated with the unemployment rate making it a good indicator of what households think about the labor market. It is not a gauge of the number of jobs, but rather people’s perceptions.

Separate government data showed that demand for workers was also cooling. Job openings dropped 256,000 to 7.079 million at the end of August. There were about 1.01 job openings for every unemployed person compared with 1.06 in July. Both figures were signs that openings were becoming more scarce.

Despite the drop in confidence, the labor market was not losing steam. As of the most recent data when the Conference Board released its September report, job growth has been accelerating in August. This highlights the disconnect between public perception and the actual state of the economy. Households can get nervous even as employers continue to hire people.

September's survey shows unease rather than proof that an economic downshift is in the works. Americans were growing increasingly pessimistic about jobs, business conditions, interest rates and the Middle East conflict. The crucial question is if that pessimism will prove to be a persistent weakness.

Sources