Consumer confidence drops to 12‑year low of 81.8 as inflation worries rise
The Conference Board reported that the U.S. consumer confidence index fell 6.7 points this month to 81.8, marking a 12‑year low. Median inflation expectations for the next year rose 0.3 points to 5.1%, while the share of households expecting higher interest rates in the next 12 months jumped 5.2 points to 68.4%.
The drop reflects higher fuel prices, increased borrowing costs and employer hiring anxiety, according to the Conference Board. New York Federal Reserve President John Williams said there is no urgent need for another rate increase, projecting inflation to end 2026 at 3.5% and unemployment to ease from 4.1% to 4% over the coming year. Traders lowered the odds of a rate hike at the Oct. 28 Fed meeting to 47% from 71% on Monday, while a NABE survey showed 49% of economists view policy as too stimulative, up 38 points since February.
“Consumers are more disgruntled and squeezed in this economy than they felt during the 2020 pandemic,” Heather Long, chief economist at Navy Federal Credit Union said.
The Conference Board noted that its survey aligned with the University of Michigan’s Friday release. Michigan’s survey showed consumer sentiment at a four‑month low and personal‑finance views down about 10%.
What we know
Consumer confidence index fell 6.7 points this month to 81.8 from 88.6 in August
Consumers’ median expectations for inflation in 12 months rose 0.3 percentage points to 5.1%
Share of households anticipating higher interest rates over the next 12 months surged 5.2 percentage points to 68.4%
Inflation will end 2026 at 3.5% and slow to just above 2% next year before hitting the Fed’s 2% target in 2028
Unemployment during the coming year will edge down from 4.1% to 4%