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Consumer confidence fell dramatically in September to 98.7 from 105.6 in August. September’s decline was the largest since August 2021, with all five components of the index deteriorating.

The Present Situation Index, reflecting current business and labor market conditions, dropped 10.3 points to 124.3. The Expectations Index, which reflects consumers’ short-term outlook for income, business and labor market conditions, declined 4.6 points to 81.7, slightly above the recession signal threshold of 80. Consumers’ assessments of current business conditions turned negative, with only 18.8% of consumers saying business conditions were “good,” while views of the current labor market situation softened further. Consumers also felt more pessimistic about future labor market conditions, with more consumers anticipating fewer jobs to be available than more. Consumers also felt less positive about future business conditions and future income.

Consumers’ views of their current financial situation weakened further, with 18.0% anticipating income growth, down from 18.6% in August. Despite slower overall price increases, inflation expectations increased to 5.2% in September, but expectations for higher interest rates continued to decline. Buying plans for homes and new cars improved slightly, while purchase plans for big-ticket appliances were mixed. Despite the largely negative responses, concerns about a recession remained stable and low.