The Conference Board Reports Decline in Consumer Confidence Amid Job and Income Concerns

What's Happening?

Consumer confidence in the United States has decreased, as reported by The Conference Board. The decline is attributed to growing concerns over job availability and income prospects. The consumer sentiment index fell by 1.3 points to 97.4, with expectations for the next six months also declining. The proportion of consumers who find jobs hard to get has reached its highest level since 2021, and those expecting a decrease in income rose to 12.6% from 11.8% in July. Stephanie Guichard, a senior economist at The Conference Board, noted that consumer appraisal of job availability has declined for the eighth consecutive month. Additionally, Federal Reserve Chair Jerome Powell highlighted risks to employment, with U.S. payrolls increasing by an average of only 35,000 per month from May through July, compared to 168,000 last year. The situation is compounded by concerns over tariffs and inflation, with the average tariff rate reaching 18.6%, the highest since 1933.

Why It's Important?

The decline in consumer confidence is significant as it reflects broader economic challenges, including a cooling job market and potential inflationary pressures. The concerns over job availability and income could impact consumer spending, a critical driver of the U.S. economy. The tariffs introduced under President Trump's trade policies are contributing to higher prices, which may further strain household budgets. The Federal Reserve's acknowledgment of downside risks to employment and inflation highlights the delicate balance policymakers must maintain to support economic growth while controlling inflation. The situation presents challenges for businesses and policymakers as they navigate these economic headwinds.

What's Next?

Economists predict that economic growth may improve in the second half of 2025, with the Atlanta Fed forecasting a 2.2% GDP growth rate for the current quarter. However, the ongoing concerns about job availability and income could continue to weigh on consumer sentiment. Policymakers may need to consider measures to stimulate job growth and address inflationary pressures. The impact of tariffs on consumer prices will also be a critical area to monitor, as it could influence future trade policy decisions.