By Matt Ott
AP Business Reporter
Americans are feeling less confident financially as summer comes to a close and high prices and interest rates weigh on their willingness to spend.
There were also signs Tuesday of cooling in what has been a very resilient U.S. jobs market.
The Conference Board, a business research group, said its consumer confidence index tumbled to 106.1 in August from a revised 114 in July. Analysts were expecting a reading of 116.
August’s swoon — which has somewhat mirrored the stock market decline this month — erased gains from June and July.
The index measures both Americans’ assessment of current economic conditions and their outlook for the next six months. Both measures saw significant declines in August.
Consumers’ view of current conditions fell to 144.8 from 153, and the index for future expectations slid to 80.2 from 88 in July. Readings below 80 for future expectations historically signals a recession within a year.
Confidence appeared to rebound late in the spring as inflation eased in the face of 11 interest-rate hikes by the Federal Reserve. But this month’s downturn reflects consumer anxiety over spending on non-essential goods, particularly if they have to put it on a credit card with an elevated interest rate.
The cost of every day, essential items also has consumers frustrated.
The U.S. economy — the world’s largest — has proved surprisingly resilient in the face of sharply higher borrowing costs. Employers are adding a strong 278,000 jobs a month so far this year; and at 3.5% in July, the unemployment rate is not far off a half-century low.
Tumbling inflation and sturdy hiring had raised hopes the Fed just might pull off a so-called soft landing — slowing the economy just enough to tame inflation without tipping the United States into recession.
But recent data suggests that Americans might be tightening their budgets as the school year begins, and with the all-important holiday season just a couple months away.
- Posted August 30, 2023
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U.S. consumer confidence wanes with prices still high and signs of a cooling job market
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