By Lucia Mutikani
WASHINGTON (Reuters) -U.S. consumer confidence eased to a six-month low in October amid worries about the availability of jobs in the near-term, offering more ammunition for the Federal Reserve to cut interest rates again on Wednesday.
The Conference Board survey on Tuesday also confirmed what economists describe as a K-shaped economy, with confidence declining among consumers making an annual income of less than $75,000, but consumers earning more than $200,000 a year more upbeat.
Economists argue that high-income households are keeping the economy afloat through robust consumer spending.
Lower-income households are struggling to make ends meet amid higher prices, including from President Donald Trump's broad tariffs on imports, economists say.
The Conference Board said references to prices and inflation in write-in comments to the survey remained the main topic influencing consumers' views of the economy this month. It said while the mention of tariffs declined, the number of references remained elevated.
"Consumers are weary and for good reason, the stock market records are not helping them get jobs or put food on the table, and with store-bought goods inflation still rising, many Americans are being left behind in Trump 2.0," said Christopher Rupkey, chief economist at FWDBONDS.
"Fed officials will likely not turn a blind eye to these sluggish consumer confidence readings and are likely to deliver on the market's long-held expectations for an interest rate cut on Wednesday."
The Conference Board said its consumer confidence index fell to 94.6 this month, the lowest reading since April, from an upwardly revised 95.6 in September. Economists polled by Reuters had forecast the index slipping to 93.2 from the previously reported 94.2 in September.
The decline in confidence was concentrated among consumers under the age of 35 and to a lesser extent those above 55 years, and improved among the 35 to 54 cohort. Consumers identifying as Independents reported an improvement in confidence, but the mood among Democrats and Republicans was downbeat.
The survey showed references to domestic politics were "up notably" in write-in comments, "with the ongoing government shutdown mentioned multiple times as a key concern." The nearly month-long shutdown is on track to become the longest on record, with no sign of negotiation between Republicans and Democrats in the U.S. Congress to end the impasse over spending.
CONSUMERS CAUTIOUS ON THE LABOR MARKET
The share of consumers who expected fewer jobs over the next six months increased to a six-month high of 27.8% from 25.7% in September. The proportion anticipating more jobs was also the lowest in six months. Consumers' views of the current labor market conditions, however, improved.
The survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, widened to 9.4% from 8.7% last month.
This measure correlates to the unemployment rate in the Labor Department's monthly employment report and suggested the unemployment rate has likely remained near a four-year high of 4.3%. In the absence of official economic data because of the shutdown of the government, the Conference Board survey offers a glimpse into the health of the labor market.
"That may suggest some stabilization in the unemployment rate, though it's still early to say whether the differential is leveling off after having steadily declined from a recent peak of 22.2% in December," said Abiel Reinhart, an economist at JP Morgan.
The U.S. central bank is expected to lower its benchmark overnight interest rate by another 25 basis points to the 3.75%-4.00% range on Wednesday.
Government data last week showed a moderation in the pace of consumer price increases in September. The inflation report was published despite the shutdown to help the Social Security Administration calculate its 2026 cost-of-living adjustment for millions of retirees and other benefits recipients, who will get a 2.8% increase.
The Conference Board's average inflation expectations for the next 12 months increased to 5.9% from 5.8% in September.
(Reporting by Lucia MutikaniEditing by Chizu Nomiyama and Frances Kerry)
