Consumer confidence sinks to a 12-year low as prices and job worries mount

NEW YORK — American consumers grew markedly more pessimistic in September, pushing a closely watched confidence gauge to its lowest reading in more than a decade.

The Conference Board's Consumer Confidence Index dropped to 81.9 from 88.6 in August. Both parts of the survey weakened: the measure of how people feel about current conditions fell 7.9 points to 109.3, and the gauge of expectations for the next six months slid 5.9 points to 63.6 — its third straight monthly decline and well below the level that has historically signaled recession risk.

Prices top the list of worries

In written responses, consumers most often mentioned the cost of goods and services and the price of oil and gasoline, with those mentions reaching new highs. Politics, trade and employment were also frequently cited, while concern about war and conflict eased slightly.

Expectations for inflation over the next year rose to an average of 6.1%, with the median at 5.1%.

The job market is losing its cushion

The survey's labor gap — the share saying jobs are plentiful minus the share saying they are hard to get — narrowed to just 1.7 percentage points, down 2.5 points from August. The organization's chief economist, Dana Peterson, said households now expect both business conditions and the labor market to weaken.

The report weighed on stocks Tuesday and adds pressure on policymakers heading into the final stretch before the midterm elections.