By Matt Ott
AP Business Writer
WASHINGTON (AP) — Americans’ confidence in the economy sank to the lowest level in more than a decade this month as prices remain elevated and wages stagnate amid the ongoing Iran war.
The Conference Board said Tuesday that its consumer confidence index tumbled 6.7 points to 81.9 in September, down from 88.6 in August. That’s the lowest reading in the board’s survey since April 2014 and below the lowest level reached during the pandemic.
Respondents’ views of their present situation fell by 7.9 points to 109.3. Their short-term outlook also slid, falling 5.9 points to 63.6.
Americans remain flustered by the economy after five years of elevated inflation, potentially posing a risk to President Donald Trump and Republicans in the midterm elections, which are a little more than a month away.
Write-in responses to the board’s survey, collected from September 1-23, were mostly pessimistic this month, with frequent references to the high cost of gas, goods and services.
“The Consumer Confidence Index deteriorated notably in September, following two prior months of softening,” said Dana Peterson, the Conference Board’s chief economist, adding that consumers’ views of current business conditions became negative for the first time since September 2024.
Trump has continued to blame high prices on his predecessor, Democrat Joe Biden, yet inflation has risen since Trump’s inauguration last year.
Earlier this month, the government reported that consumer inflation accelerated last month and gas prices spiked as fighting in the Middle East dragged on. The consumer price index rose 3.4% last month compared with a year ago, the Labor Department said Friday, just like July. But inflation quickened month to month as costs jumped 0.4% from July, quadrupling the 0.1% registered in the previous month.
The Federal Reserve two weeks ago raised its benchmark interest rate for the first time since 2023 in an effort to quell stubbornly high inflation, and the central bank signaled another rate hike could occur later this year.
The quarter-point increase lifted the Fed’s key rate to about 3.9% and, over time, could result in higher borrowing costs for mortgages, auto loans and credit cards.
Gasoline prices — which currently average $4.46 for a gallon of regular — are not all that is rising. Prices for appliances, car repairs, and wireless phone services also jumped in August.
The most recent measure of the Federal Reserve’s preferred inflation gauge — the personal consumption expenditures price index — was up 3.7% in June from a year earlier. That was down from May’s 4.1% year-over-year increase but up from 2.8% before the Iran war began on Feb. 28. It was 2.5% when Trump was inaugurated in January 2025.
The government issues its August PCE data Wednesday.
Consumers’ views of the current labor market also worsened in September, but remained in positive territory, the board said. Respondents broadly said they expected their household incomes to rise, but not as much as in previous months.
The U.S. labor market bounced back in August as employers added a surprising 162,000 jobs, ending a summer of lackluster hiring. The unemployment rate remained at a low 4.1%, but some of that can be attributed to significant numbers of people giving up on their search for employment in previous months.
Inflation has dominated conversations this year in business and households, and meager pay raises have made rising prices more painful for many. Average hourly wages rose 3.1% last month from a year earlier, the weakest year-over-year increase since May 2021.
The government issues its September jobs report on Friday.