Economy·Consumer ConfidenceYet another recession indicator is flashing as consumer confidence declines sharply in SeptemberBy Eleanor PringleBy Eleanor PringleReporterEleanor PringleReporterEleanor Pringle is an award-winning reporter at Fortune covering news, the economy, and personal finance.
Eleanor previously worked as a correspondent and news editor in regional news in the U.K.
She her journalism training with the Press Association after earning a degree from the University of East Anglia.SEE FULL BIO Data the Fed can watch, reports from the Conference Board, are showing recession fears while BLS data goes unpublished during government lockdown.Chip Somodevilla - Getty ImagesWall Street remains optimistic avoiding recession, but consumer confidence is sliding, with the Conference Board’s Expectations Index falling further into recessionary territory in September.
Confidence in conditions and job availability has weakened sharply, raising concerns that the spending power underpinning corporate growth could falter.
While inflation expectations eased slightly, they remain elevated, and economists warn the looming government shutdown could further obscure the economic picture by halting key data releases.
Wall Street is largely convinced that the American economy will avoid a recession, with stocks climbing higher week-after-week thanks to this optimism.
Yet consumers on the ground are looking increasingly shaky, pushing confidence barometers into unhealthy territory. A few times this year recession indicators have flashed a warning.
The yield curve inverted and then mptly righted itself. And the White House’s tariff plans led the s of JPMorgan’s Jamie Dimon to warn economic contraction can’t be taken off the table.
This week came another warning: The Conference Board’s Expectations Index, which analyses the short term outlook for income, , and labor market conditions—decreased by a further 1.3 points to 73.4.
The benchmark triggering a recession warning is a reading of 80. Consumer confidence dropped “sharply” in September, the organization wrote.
The Consumer Confidence index declined to 94.2 in September from 97.8 in August, while the Present Situation Index (based on consumers’ assessments of and labor market conditions) fell 7 points to 125.4.
Both indices are measures against an 100 point benchmark recorded in 1985. If there’s one part of the economy that analysts don’t want to see weakening, it’s consumers.
This week regional Fed President Beth Hammack highlighted that Wall Street’s expectations of solid performance was derived from stable consumer spending.
Indeed, the s of Bank of America CEO Brian Moynihan have expressed their surprise and optimism that American consumers have fared so well in the past couple of years, and have continued to drive the economy as a result.
If that spending engine stutters it would have significant ramifications for the economy as a whole.
Stephanie Guichard, senior economist, global indicators at The Conference Board, wrote alongside the data release: “The present situation component registered its largest drop in a year.
Consumers’ assessment of conditions was much less positive than in recent months, while their appraisal of current job availability fell for the ninth straight month to reach a new multiyear low.
“Consumers were a bit more pessimistic future job availability and future conditions but optimism future income increased, mitigating the overall decline in the Expectations Index.” Indeed, September’s deterioration doesn’t signal the first time the indicator has entered recession territory—it’s been there since February 2025—but marks a further step away from a healthy outlook over a longed period of time.
When it comes to economic forecasting, oftentimes the blem with inflation can come down not only to the actual increases in prices, but also consumers’ expectations of how much they will go up.
That’s because expectations could either cause shoppers to change their habits unnecessarily, or begin hunting for higher-paid jobs and inducing a wage-price spiral.
On this front the Conference Board found slight imvement, but still cause for some concern.
It reported consumers’ average 12-month inflation expectations sat at 5.8% in September from 6.1% in August—well above the reality of a little under 3% reported in the Bureau of Labor Statistics (BLS) reporting.
“Consumers’ write-in responses showed that references to prices and inflation rose in September, regaining its top position as the main topic influencing consumers’ views of the economy,” added Guichard.
The data question That being said, economists are already warning spectators against relying too heavily on private sector data in a potential void of reporting during the government shutdown.
There will be no jobs report on Friday, nor will there be U.S. jobless claims data released during the shutdown.
And with the BLS compiling the CPI report due to come in mid-October, this too could be impacted by the shutdown.
UBS’s chief economist warned clients in a note this morning: “Economists now lack official economic data from the U,S., private sector data is a poor substitute.
Private data is viewing the economy through a keyhole—, but with a narrow field of vision.” “Official data is opening the door.
Private data relies on official data to model the bits of the economy outside its field of vision, and that modelling becomes less accurate in the absence of official data.” Fortune Global Forum returns Oct.
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