Another downside miss for consumer confidence with the index down to 94.2 in September versus the expected 96.0, and down from a revised 97.8 in August (previously 97.4).

The report features a striking drop in the present situation reading to 125.4 from 132.4 in August, and a more shallow 1.3 point decline in the expectations index to 74.4 from 74.7.

The Conference Board gloomily notes that the expectations index has been below the threshold of 80 that typically foretells recession since February 2025.

The board says survey respondents volunteer more comments about rising prices, and inflation returns to the top of their list of worries. On the other hand, 1-year inflation expectations ease a little to 5.8 percent from 6.1 percent in August.

The present situation index suffers its biggest drop in the last 12 months. That reflects a much bleaker assessment of current business conditions while the view of current job availability is down for ninth straight month to reach a new multiyear low.

The consensus looks for a decline to 96.0 in September from 97.4 in August as sentiment remains gloomy on inflation and employment worries.

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.