Level 1 — Absolute Beginner
American shoppers are worried. A big survey says people feel less sure about money than at any time since 2014.
The survey is called the consumer confidence index. This month it fell to 81.9. That is a big drop from last month.
People say prices are too high. They talk about gas and oil most of all. For the first time in four years, more families said their money situation is bad than good.
Stocks fell on Tuesday. The S&P 500 lost 0.8 percent. Many people now think interest rates may go up again.
- survey
- A set of questions asked to many people.
- confidence
- A feeling that things will go well.
- consumer
- A person who buys things.
- prices
- How much things cost.
- gas
- Fuel for a car.
- stocks
- Small parts of a company that people can buy.
- interest rate
- The cost of borrowing money.
- drop
- A fall to a lower level.
Level 2 — Elementary
US consumer confidence fell to its lowest level in more than a decade. The Conference Board said its index dropped 6.7 points in September to 81.9, the weakest reading since 2014. Economists had expected a much higher number, about 89.2.
Two parts of the index also fell. The measure of how people see today's economy dropped to 109.3. The measure of what they expect in the next six months fell to 63.6, its third drop in a row. A reading below 80 is often a warning of a recession.
Fuel costs are a big reason. People mentioned prices, oil and gas more than ever. For the first time since the question began four years ago, more people said their family's money situation is bad than good.
Wall Street also had a weak day. The S&P 500 fell 0.8 percent to 7,683.69 and the Nasdaq lost 0.9 percent. Traders now see about a 70 percent chance that the Federal Reserve will raise interest rates again in October.
- index
- A number that tracks changes over time.
- reading
- The number shown by a measurement.
- recession
- A period when the economy shrinks and jobs are lost.
- expectations
- What people think will happen.
- Wall Street
- The center of American finance in New York.
- Federal Reserve
- The central bank of the United States.
- weakest
- The lowest or least strong.
- traders
- People who buy and sell stocks.
Level 3 — Intermediate
American households have rarely sounded so gloomy. The Conference Board's Consumer Confidence Index fell 6.7 points in September to 81.9, its lowest reading since 2014 and far below the 89.2 that economists polled by Reuters had forecast.
Both halves of the index deteriorated. The Present Situation Index, which captures views of business and labor conditions today, slid 7.9 points to 109.3, while the Expectations Index, a forward looking gauge of income and jobs, dropped 5.9 points to 63.6, its third consecutive monthly decline. The Conference Board notes that an expectations reading under 80 has historically signalled a recession within a year.
The survey also revealed a striking shift in attitude. For the first time since the question was introduced four years ago, more respondents described their family's financial situation as bad than good. Mentions of high prices, and of oil and gas in particular, hit new highs after a September surge in fuel costs.
Markets echoed the unease. The S&P 500 fell 0.8 percent to 7,683.69 and the Nasdaq dropped 0.9 percent. With inflation stubborn and bond yields elevated, futures tools now show roughly a 70 percent probability that the Federal Reserve will lift rates by a quarter point at its October meeting.
- deteriorate
- To become worse.
- gauge
- A measure or indicator.
- consecutive
- Following one after another without a break.
- respondents
- People who answer a survey.
- surge
- A sudden strong increase.
- stubborn
- Hard to change or remove.
- yield
- The return an investor earns on a bond.
- gloomy
- Feeling sad or without hope.
Level 4 — Advanced
American households have seldom sounded so despondent. The Conference Board's Consumer Confidence Index tumbled 6.7 points in September to 81.9, its lowest reading since 2014 and a long way below the 89.2 that economists surveyed by Reuters had predicted.
The deterioration was broad. The Present Situation Index, which measures assessments of current business and labor conditions, shed 7.9 points to 109.3, while the Expectations Index, a forward looking barometer of income, business and jobs, fell 5.9 points to 63.6, its third consecutive monthly decline. The Conference Board points out that a reading below 80 has customarily foreshadowed a recession within twelve months.
Perhaps the most telling detail lies in the qualitative responses. For the first time since the question was introduced four years ago, more respondents judged their family's finances to be bad than good, and references to prices, and to oil and gas in particular, reached record prominence after September's spike in fuel costs squeezed household budgets.
Equity markets registered the unease. The S&P 500 slipped 0.8 percent to 7,683.69 and the Nasdaq shed 0.9 percent. With inflation sticky and government bond yields elevated, futures pricing implies roughly a seventy percent likelihood that the Federal Reserve will raise borrowing costs by a quarter point in October, a prospect that sits uneasily beside a public already feeling stretched.
- despondent
- Feeling very low in spirit.
- barometer
- Something that measures a mood or trend.
- foreshadow
- To be a sign of something that will happen later.
- qualitative
- Based on descriptions and opinions rather than numbers.
- prominence
- The state of being important or easy to notice.
- equity markets
- Markets where company shares are traded.
- sticky
- Slow to fall, as with inflation.
- borrowing costs
- The price of taking out a loan.
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