U.S. consumer confidence fell by 6.7 points to 81.9 in September, significantly below expectations and marking its lowest level since 2014, according to data released Tuesday by the Conference Board. The deterioration in confidence was broad-based, affecting all age groups, income brackets, and regions, with the survey conducted between September 1 and September 23.

The report indicated that the sub-index reflecting current economic conditions dropped to its lowest point since 2021, while the expectations index for the next six months also fell to a more than one-year low. Inflation expectations rose, and the proportion of respondents anticipating further interest rate hikes reached a more than four-year high. Elevated energy prices (with gasoline prices exceeding $4 per gallon) and persistent inflationary pressures continued to erode real household incomes, leading to a widespread contraction in plans to purchase homes, cars, and major appliances.

Optimism about the job market also cooled significantly, with the percentage of consumers who believe jobs are easy to find falling to its lowest level since 2021, corroborating the decline in August job openings to a five-month low, released on the same day. Income expectations simultaneously worsened, as the proportion of respondents expecting their incomes to increase over the next six months dropped to its lowest point this year.

Samuel Tombs and Oliver Allen, economists at Pantheon Macroeconomics, noted that while high energy prices are exacerbating some inflationary pressures, the renewed squeeze on real incomes will be a significant headwind to economic growth, requiring the Federal Reserve to be cautious about further rate hikes.