Key Takeaways
- US consumer confidence index fell to 81.9 in September, its lowest level since April 2014.
- High cost of living and economic uncertainty from the Iran war are major factors.
- Democrats seek to capitalize on economic concerns ahead of November midterm elections.
US consumer confidence plunged to its lowest level since 2014 in September, according to a key benchmark published by the Conference Board. The consumer confidence index fell by 6.7 points to 81.9, marking a significant decline from the previous month.
The sharp drop in consumer confidence is attributed to the high cost of living and economic uncertainty stemming from the ongoing Iran war. Dana Peterson, chief economist at the Conference Board, noted that consumer write-in responses were predominantly pessimistic, with many citing prices, particularly oil and gas prices, as a major concern.
Heather Long, chief economist at Navy Federal Credit Union, expressed concern over the new data, stating, 'American consumers are worried about this economy. That’s alarming just as the most important shopping season of the year kicks off.'
The decline in consumer confidence is particularly concerning as the United States heads into key midterm elections in November, where Democrats are seeking to wrest control of Congress from the Republican Party. The economic concerns are likely to play a significant role in voter sentiment.
The high cost of living in the US has been exacerbated by the surge in global oil prices, with the average price of a gallon of regular gasoline up almost 50 percent since the start of the war, according to data from the AAA motor club.
While the US consumer confidence index has hit a 2014 low, a gap between consumer and business sentiment remains in Pakistan. The September State Bank of Pakistan (SBP)–Institute of Business Administration (IBA) Confidence Index stood at 49.1, compared to the Q3 Ipsos Consumer Confidence Index of 33.6.
Dr Durre Nayab, Director of Socioeconomic Insights and Analytics at the Pakistan Institute of Development Economics (PIDE), explained that the gap could be a measurement artefact, noting that the SBP-IBA index is a diffusion index, where 50 signals neutrality, while the Ipsos index is constructed differently and historically has hovered in the 30s.
The divergence in sentiment between consumers and businesses in Pakistan highlights the different economic realities faced by the two groups. While a financially stronger minority has greater resources and capacity to absorb shocks, a much larger population struggles with weaker purchasing power and greater vulnerability.
Economists and policymakers in Pakistan are closely monitoring these divergent trends to understand the underlying causes and to develop appropriate policy responses.
Consumers’ write-in responses regarding factors affecting the economy were mostly pessimistic in September.
Dana Peterson, Chief Economist at the Conference Board
American consumers are worried about this economy. That’s alarming just as the most important shopping season of the year kicks off.
Heather Long, Chief Economist at Navy Federal Credit Union
