According to Tuesday's data, rising gas prices and high rates of interest contributed to increased economic uncertainty, which dampened consumer confidence and lowered the key indicator for the economy to its lowest level in four-months.
Conference Board's Consumer Confidence Index dropped for the second consecutive month. It fell to 103 from 108.7 in August, which had been upwardly revised. According to Conference Board data, the index is now at its second lowest level of this year. It's just above the 102.5 reading from May.
Dana Peterson is the chief economist of the Conference Board. She said that consumers are still concerned about rising prices, especially for gasoline and groceries. Consumers also expressed concern about the political climate and higher interest rate. Consumer confidence declined across all age groups and was most noticeable among those with household incomes over $50,000.
Peterson said that the 'Expectations Index,' a measure of business confidence, fell below 80, a threshold which often indicates a possible recession, to 73.7. This reflects a lower level of optimism about future economic conditions, employment and incomes.
She said that consumers may hear more bad news regarding corporate earnings. Job openings are also shrinking and interest rates are continuing to rise, making expensive items even more costly. The expectations for interest rates fell in September, after a surge in the previous month. However, the outlook for the stock market continued to decline.
After dropping in August, the share of consumers who think a recession will occur'somewhat probable' or very likely rose in September.
Consumers face a rising tide of headwinds, as inflation, still high, continues to bite, along with a sluggish labor market, credit card debt and a return of student loans.
Matthew Martin, US-based economist at Oxford Economics, published a comment on Tuesday that reinforced the expectation of consumers cutting back their spending in the fourthquarter of this year.