US Consumer Confidence Drops to Lowest Level Since 2014 Amid Rising Prices Ahead of Midterm Elections

United States consumer confidence has dropped to its lowest level since 2014, arriving just over a month before the congressional midterm elections. According to a monthly report released on Tuesday by The Conference Board, consumers identified the rising costs of goods and services as the primary driver behind this decline.

“The Consumer Confidence Index deteriorated notably in September, following two prior months of softening,” said Dana M Peterson, chief economist at The Conference Board, in a release announcing the report.

Consumers highlighted higher prices at the pump as a major contributing factor. Data from the American Automobile Association (AAA), which tracks daily petrol prices, shows that the average price for a gallon (3.78 litres) of petrol has increased by 37 cents over the past month. On Tuesday, the average price reached $4.45, up from $4.08 a month prior.

“Oil and gas prices in particular rose to new heights, reflecting September’s surge in fuel costs. Comments about war/conflict eased this month but remained elevated,” Peterson noted.

The release of the consumer confidence report precedes a key inflation report used by the Federal Reserve to gauge inflation trends: the personal consumption expenditures (PCE) index, which was up 3.7 percent in June from a year earlier. Earlier this month, the US central bank raised interest rates for the first time in three years, increasing costs for credit cards as well as car and bank loans. With another interest rate decision scheduled for its October 27-28 meeting, political pressure mounts on Republicans as consumer sentiment declines across all political affiliations.

The report, which marks the second-to-last major consumer confidence reading before the midterm elections that will determine the balance of power in Washington, DC, shows that consumer confidence fell across all political groups. Meanwhile, a recent Marist poll indicates that US consumers believe the Democratic Party would handle the economy better than their Republican counterparts, with 42 percent favoring the Democrats compared to 34 percent for the Republicans.

As the trading day concluded, US markets experienced only slight declines. The tech-heavy Nasdaq closed down 0.08 percent, the Dow Jones Industrial Average dropped 0.2 percent, and the S&P 500 finished down 0.1 percent.