Retail sales rose broadly in August, signaling that the rise in consumer confidence since the beginning of the year was finally trickling down to spending patterns.
However, today’s release suggests economic headwinds that still prevail weighed on sentiment in September.
The Conference Board reported consumer confidence fell from 54.5 in August to 53.1 in September, missing the Bloomberg forecast of 57.0.
The Present Situation Index decreased, as consumers viewed both current business conditions and the labor market less favorably than last month.
“While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes. With the holiday season quickly approaching, this is not very encouraging news," according to the director of The Conference Board Consumer Research Center.
Though off the lows previously set, consumer confidence has been stuck in a narrow range since May amid rising unemployment and worries about the job market.
Jobless claims have been gradually coming down and a continuation of this trend should eventually lend support to consumer confidence.
Still, consumer spending is likely to face stiff headwinds amid job losses and weak growth in personal income. And it seems unlikely that born-again savers will suddenly backslide, dipping into newly-created bank accounts.
Consequently, the economy recovery is likely to be a gradual one.
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