US consumers appear less optimistic about the jobs market and more worried about future financial conditions, bringing a closely watched confidence metric to its lowest level since July 2022, a survey showed Tuesday.
The consumer confidence index fell to 97.0 in April, said The Conference Board, significantly below the 104.0 reading that analysts anticipated.
This marks the third straight month consumer confidence has worsened, the report said, and comes as President Joe Biden struggles to boost perceptions about the economy as his reelection campaign ramps up.
Inflation
“Consumers became less positive about the current labor market situation, and more concerned about future business conditions, job availability, and income,” said Dana Peterson, chief economist at The Conference Board.
But she added that despite the slip, “optimism about the present situation continues to more than offset concerns about the future.“
The biggest worries surrounded “elevated price levels, especially for food and gas,“ said Peterson. Meanwhile, politics and global conflicts were “distant runners-up,” she added.
While consumers rated current business conditions “positively,” their views of the labor market weakened with more reporting that jobs are hard to get, said The Conference Board.
Cutting back on discretionary purchases
Consumers also became less upbeat about their families’ financial situations, both currently and in the future.
When asked what spending they would cut back on to save money, consumers place discretionary purchases to the top—including food away from home, clothing/fashion items, entertainment away from home, and vacations. Meanwhile, fewer consumers plan to reduce spending on non-discretionary purchases like childcare, education, and health care.
“Perceptions about the labor market deteriorated even as job growth remains robust, and the unemployment rate is historically low,” noted Rubeela Farooqi, chief US economist at High Frequency Economics.
“A deteriorating trend in sentiment could persist,” she cautioned.
This risks bogging down spending and growth, given that inflation remains persistent and interest rate cuts are “not imminent,” she said.
