US consumer confidence sinks to 81.9, below its pandemic low

Measured in points, households marked down the present more than the future. The present-situation index lost 2 points more than the expectations index did, so the gap between the two components narrowed from 47.7 in August to 45.7 ^[12][11]. Measured in percent, the order reverses. Expectations fell about 8.5% from an implied August level of 69.5, and present conditions fell about 6.7% from an implied 117.2 ^{[10][13][9][14]}.

That split matters for anyone using the survey to argue that households are retreating. The survey measures attitudes. The one claim about behaviour in either report comes from James Knightley ^[16], in a note published under the headline "Sentiment Slides Again, Yet U.S. Consumers Keep Spending" ^[15]. The note's subhead reads "Confidence falls further as job and inflation fears mount" ^[3].

One reading is that sentiment leads and spending follows, in which case a 6.7-point monthly drop ^[1] to a level below the pandemic trough ^[8] is an early warning for consumer-facing revenue. A second is Knightley's: sentiment and spending have come apart, and spending holds ^[15]. A third sits between them. Weakness in how people rate current conditions shows up first in hiring and pay, and that is where both publishers' headlines put the worry ^[2][3].

I think the second fits the evidence available, because the only statement about spending says it continues ^[15]. The counter-case is the component split. A 7.9-point fall in how people rate their present situation ^[4] is harder to dismiss as gloom about the future than an expectations-only drop would be, and an expectations index at 63.6 ^[5] leaves little cushion if the present-situation score keeps sliding. Spending data turning down in the months after this survey, in the same direction as the index, would prove this view wrong. Consumer-facing companies that hold their plans are accepting that a reading last seen in April 2014 ^[6] may turn out to have been the first sign.