Designed by NextGen News
Consumer confidence in the economy fell to its lowest point in 12 years as worries over gas prices, inflation, and the overall cost of living continue to rise, per a new Conference Board survey.
What’s behind the pessimism?
Consumers mainly cited the ever-growing number at the fuel pump when asked about the main driver (sorry) of economic fears, with the high cost of goods and services as a close second.
Americans’ concerns aren’t without reason. In September alone:
The price of gas increased roughly 42% from the same time last year, according to AAA.
Diesel hit a record $6.53 per gallon, up about 73% since February.
The job market also added to the unease: An economist interviewed by The Wall Street Journal said many “feel jobs are more scarce,” as the share of Americans expecting fewer jobs over the next six months climbed to 28.4%, while just 14% think more jobs will become available.
Not to add to the fears, but… it can always go lower. Consumer confidence has dropped by 40 or more points from current levels in the past, almost always during economic recessions.
Despite all that fear…
Americans are still opening their wallets. At a time when most say prices are too high and they feel much worse about where the economy is heading:
Consumer spending grew at a yearly pace of almost 4% in the second quarter.
On top of that, roughly 42.6% of consumers still plan to take a vacation in the next six months.
However, there are some signs people are pulling back: On average, purchases of homes and cars fell slightly in the last six months, while planned spending on hotels, movies, flights, and amusement parks also dipped.
/ Why does this matter? The large drop in consumer confidence may lead more Americans to delay big purchases and cut back on “fun” spending. If that pullback spreads, it could lead to slower hiring, fewer hours, and weaker holiday sales, turning what is essentially just consumer anxiety into a bigger economic slowdown.
