U.S. consumer confidence hits seven-month low as short-term economic outlook darkens

WASHINGTON, Sept.28 (Reuters) – U.S. consumer confidence fell to its lowest level in seven months in September, as a relentless rise in COVID-19 cases heightened concerns about the near-term outlook for the economy, consistent with expectations of slower growth in the third quarter.

Tuesday’s Conference Board survey showed consumers were less interested in buying homes and expensive items such as motor vehicles and major appliances over the next six months. Consumers were also not as optimistic about their view of the job market as they had been in the previous month.

Economic activity has cooled in recent months as the momentum for pandemic relief money waned and infections erupted, driven by the highly contagious Delta variant of the coronavirus. Shortages of labor and raw materials have also eroded growth.

“But given that this wave seems to be at its height, there is hope that confidence has just bottomed out,” said Robert Frick, business economist at the Navy Federal Credit Union in Vienna. , Virginia. “Assuming predictions of a Delta fall hold true, this setback could be a three-month low during the recovery.”

The Conference Board said its consumer confidence index fell to 109.3 this month from 115.2 in August. The third consecutive monthly decline pushed the index to its lowest level since February.

The measure, which places more emphasis on the labor market, fell 19.6 points from a peak of 128.9 in June. This contrasts with the University of Michigan consumer survey, which showed sentiment leveled off at the start of the month.

Economists polled by Reuters expected the consumer confidence index to rise to 114.5.

“These back-to-back declines suggest that consumers have become more cautious and are likely to cut spending in the future,” said Lynn Franco, senior director of economic indicators at the Conference Board in Washington.

Washington politicians bickering over expanding the federal government’s borrowing capacity are also casting a cloud. Treasury Secretary Janet Yellen told lawmakers on Tuesday that the government could run out of cash by October 18 unless the U.S. Congress raises the debt ceiling.

Yellen warned that a default would be a “catastrophic” event that would trigger a “financial crisis and calamity.” Read more

The Conference Board’s so-called labor market differential, derived from data on respondents’ views on whether jobs are abundant or hard to come by, fell to 42.5 this month from 44.4 in August, the highest since July 2000.

This measure is closely correlated with the unemployment rate in the Ministry of Labor’s closely watched employment report. The September jobs report is due for release on October 8, but could be delayed if Congress cannot reach an agreement by Friday to maintain government funding. Read more

Wall Street stocks were trading lower. The dollar appreciated against a basket of currencies. US Treasury prices have fallen.

HOUSEHOLD PRICES INCREASE

Consumer inflation expectations over the next 12 months slipped to 6.5% from 6.7% last month.

Purchase intentions for motor vehicles fell to their lowest level in nine months. Fewer consumers planned to buy home appliances like washing machines and dryers over the next six months, supporting expectations of a sharp slowdown in consumer spending this quarter, which will ultimately dampen economic growth . Estimates of gross domestic product growth for the third quarter are mostly below an annualized rate of 5%. The economy grew at a pace of 6.6% in the second quarter.

Expectations of slower GDP growth were bolstered by a separate Commerce Department report on Tuesday showing the merchandise trade deficit increased 0.9% to $ 87.6 billion in August, businesses having imported more products to replenish their stocks. Trade subtracted GDP growth for four consecutive quarters.

Imports of goods rose 0.8% to $ 236.6 billion, led by consumer goods and industrial supplies. But imports of food, capital goods and motor vehicles fell. Imports of motor vehicles have likely been weighed down by a global semiconductor shortage, which is impacting production.

Higher imports offset a 0.7% increase in goods exports to $ 149.0 billion, supported by industrial supplies and consumer goods. But the nation has reported a drop in exports of capital goods, motor vehicles and food products. Exports are increasing as global economies continue to recover from the pandemic.

Some of the increase in imports ended up in the warehouses of wholesalers and retailers. Wholesale inventories accelerated 1.2% last month. Inventories at retail edged up 0.1%. Inventories at retail were held back by a 1.5% drop in inventories of motor vehicles.

Non-auto retail inventories, which are included in the calculation of GDP, rose 0.6% after advancing 0.5% the previous month. Business inventories were reduced in the first half of the year. Last month’s increase is expected to soften the blow to GDP growth from the widening merchandise trade deficit.

“The real change in inventories could be slightly positive in the third quarter, as a decline in retail auto inventories is offset by inventory gains in other parts of the economy,” said Daniel Silver, economist at JPMorgan at New York.

The news on the housing market was disheartening, with the Conference Board survey showing that consumers are less inclined to buy a home for a third month in a row due to rising house prices due to tight supply.

A third report released on Tuesday showed that the S&P CoreLogic Case-Shiller National Home Price Index hit a record 19.7% in July from a year ago, after accelerating 18.7% in June.

The sustained inflation in house prices was corroborated by a fourth report from the Federal Housing Finance Agency showing that house prices hit a record 19.2% in the 12 months through July after having jumped 18.9% in June.

“We expect some moderation in home price inflation in the second half of this year, but we are still looking for the annual price

double-digit growth, ”said Nancy Vanden Houten, chief US economist at Oxford Economics in New York.

Reporting by Lucia Mutikani; Editing by Andrea Ricci and Chizu Nomiyama

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