The Conference Board's consumer confidence index for September is down 6.9 points to 98.7 after a substantial upward revision to 105.6 in August. The September index is well below the consensus of 103.0 in the Econoday survey of forecasters. The September drop nearly erases the gains in confidence in July and August after 97.8 in June. The decline reflects recent softening in labor market conditions and less optimism about the job market in the near future as well as less hope for higher household incomes. Consumer confidence can be affected in the months ahead of a presidential election as conditions are viewed with greater uncertainty. This may be especially true in 2024 against a backdrop of highly contentious political rhetoric.

The present situation index is down to 124.3 in September after 134.6 in August. It shows consumers slightly less confidence about present business conditions compared to the prior month, and with an essentially unchanged perception of job market conditions where jobs are seen as both less plentiful and harder to get.

The expectations index is down to 81.7 in September after 86.3 in August. Consumers see business conditions as weaker about six months from now and that the job market will be weaker as well along with prospects for higher income.

The Conference Board's measure of one-year inflation expectations is up to 5.2 percent in September, retracing some of the decrease to 4.9 percent in August after 5.4 percent in July. Inflation expectations can be somewhat volatile based on items closely related to day-to-day household items like food and energy. However, the backtracking in September is likely more related to an overstated decline in August as consumers anticipated a rate cut but are now more worried about their spending power in light of slowing wage growth.

The consumer confidence index in September is expected to edge down 0.3 points to the consensus forecast of 103.0 from 103.3 in August. US confidence has been flat and subdued.

The Conference Board's confidence report surveys consumers on their assessments of the labor market, business activity, and their own financial conditions. The survey is conducted by Toluna, an online community platform. (Conference Board and Toluna)

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer confidence index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.