Consumer confidence plummeted in September, the biggest drop in sentiment since August 2021, driven in part by workers’ experiences and expectations about the labor market, according to the latest report from the Conference Board.
This is a new phase of the recession, and economic concerns have shifted from inflation to jobs. Though the job market is still historically strong, its weakness is distorting how Americans think about the economy.
When the Federal Reserve cut interest rates for the first time in four years last Wednesday, Chairman Jerome Powell noted a big shift: “As inflation falls and the labor market cools, upside risks to inflation have decreased and downside risks to employment have increased.”
While consumers don’t expect an imminent recession, they’re still nervous about their employment prospects. Part of that can be blamed on the roller-coaster swings of the white-collar job market: With free borrowing money and companies competing with each other in 2021, Americans could switch jobs and get raises with relative ease.
But the job market is cooling: The information sector, which encompasses many aspects of the technology industry, is seeing a decline in employment from a year ago as some companies cut staff and many others refrain from hiring.
Job seekers are feeling the difference: The share of consumers who say jobs are plentiful has fallen since August, plummeting from 32.7% to 30.9%, according to The Conference Board. At the same time, 18.3% of consumers surveyed said it’s hard to find work, up from 16.8% in August. The “sustained decline” in this measure is “a clear sign that the labor market is not as tight as it once was,” Wells Fargo economists Shannon Seely Grein and Jeremiah Cole wrote in a Sept. 24 note.
The deterioration likely reflects consumers’ “concerns about the labor market and their reaction to reduced work hours, slowing wage growth and declining job openings,” Dana M. Peterson, chief economist at the Conference Board, said in a statement, “even though the labor market remains fairly healthy with low unemployment, few layoffs and high wages.”
Consumers also expect a bleaker outlook in the coming months, with 13% expecting their income to decrease in the next six months, higher than the 11.7% who said the same in August, according to the Conference Board.
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The consumer confidence data comes as more Americans are looking for work. The share of Americans who have looked for work in the past four weeks reached the highest level since March 2014, according to the July edition of the Federal Reserve Bank of New York’s Survey of Consumer Expectations.
Meanwhile, Americans are less confident about their ability to find work if they lost their job today, with the average probability of finding a new job declining since the start of 2023, according to the Consumer Expectations Survey.
That makes sense, considering the potential opportunities: According to the latest Job Vacancies and Labor Mobility Survey, there were 7.7 million job vacancies in July 2024, down 1.1 million from the previous year. In July 2023, there were 158,000 job vacancies in the information section, but that number plummeted to 113,000 in July 2024.
But it’s not all bad news (and vibes). The Federal Reserve finally cut interest rates, which could ease hiring and lead to cheaper credit card payments or lower mortgage rates for consumers. And with the stock market hitting record highs, workers’ investments may at least be on track. That said, it will take some time for the new monetary policy to filter through to everyday life and the labor market.
“This is a labor market where if you have a job you like, you’re in a pretty good position,” ZipRecruiter chief economist Julia Pollack previously told BI. “If there aren’t jobs, it’s very hard to find a job as a new grad, especially in the private sector outside of health care.”
Are you struggling to find work or worried about the state of the job market? Contact this reporter at jkaplan@businessinsider.com.
