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    How to make European industrial policy work

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    September consumer confidence falls the most in three years

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    The Conference Board’s consumer confidence index slid to 98.7, down from 105.6 in August, the biggest one-month decline since August 2021.
    Respondents’ concerns focused mostly on jobs and inflation.

    Consumers’ view on the economy tumbled in September, falling by the largest level in more than three years as fears grew about jobs and business conditions, the Conference Board reported Tuesday.
    The board’s consumer confidence index slid to 98.7, down from 105.6 in August, the biggest one-month decline since August 2021. The Dow Jones consensus forecast was for a reading of 104. By contrast, the index had a reading of 132.6 in February 2020, a month before the Covid pandemic hit.

    Each of the five components the organization samples fared worse on the month, with the biggest fall coming among those aged 35-54 and earning less than $50,000.
    “Consumers’ assessments of current business conditions turned negative while views of the current labor market situation softened further. Consumers were also more pessimistic about future labor market conditions and less positive about future business conditions and future income,” said Dana Peterson, chief economist at The Conference Board.
    The last time the confidence index dropped more came as inflation was just beginning a climb to what ultimately was the highest level in more than 40 years.
    Stocks saw some brief losses following the release, while Treasury yields moved lower.
    In addition to the steep drop in the confidence index, the present situation measure worsened by 10.3 points to 124.3 and the expectations index was off 4.6 points to 81.7. On the expectations measure, a reading below 80 is consistent with a recession.

    Respondents’ concerns focused mostly on jobs and inflation.
    Those saying jobs are plentiful continued to decline, falling to 30.9% from 32.7% in August, while the jobs “hard to get” measure rose to 18.3%, up from 16.8%.
    On inflation, the 12-month outlook rose to 5.2%, with concerns over price increases topping the list of economic concerns.
    “The proportion of consumers anticipating a recession over the next 12 months remained low but there was a slight uptick in the percentage of consumers believing the economy was already in recession,” Peterson said.
    The survey comes less than a week after the Federal Reserve voted to lower benchmark interest rates by a half percentage point, citing a more favorable outlook for inflation and worries over a potentially softening labor market. It was the first rate cut in four years and double the traditional quarter-point reduction.
    The survey, though, was conducted through Sept. 17, the day before the Fed approved the rate cut.

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    Deutschland, der Pechvogel

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    Fed’s Bowman: Lingering inflation risks warrant more cautious cuts

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    WASHINGTON (Reuters) – U.S. Federal Reserve Governor Michelle Bowman said on Tuesday key measures of inflation remain “uncomfortably above” the Fed’s 2% target, warranting caution as the Fed proceeds with cutting interest rates.Bowman said she agreed that progress on lowering inflation since it peaked in 2022 means it is time for the Fed to reset monetary policy.But she dissented to last week’s half-point rate reduction in favor of a more “measured” quarter-point cut because “the upside risks to inflation remain prominent,” including global supply chains at risk of strikes and other disruption, aggressive fiscal policy, and a chronic mismatch between housing supply and demand. “The U.S. economy remains strong and core inflation remains uncomfortably above our 2% target,” Bowman said in comments prepared for delivery at a Kentucky Bankers Association convention in Virginia.”Core” inflation refers to the Personal Consumption Expenditures price index stripped of food and energy costs, which Fed officials consider a good guide to overall inflation trends and which Bowman said she expects was running still at around 2.6% through August. Inflation data for August will be released on Friday. “I preferred a smaller initial cut in the policy rate while the U.S. economy remains strong and inflation remains a concern,” Bowman said. “I cannot rule out the risk that progress on inflation could continue to stall.”After holding the benchmark rate of interest steady for 14 months in a range between 5.25% and 5.5%, the Fed last week in an 11 to 1 vote cut it to the 4.75% to 5% range.Bowman’s dissent was the first by a member of the Fed’s Board of Governors since 2005. While she said she was prepared to support further cuts if incoming data showed the job market weakening, she argued that wage growth and the fact that there were still more open jobs than available workers suggested the labor market remained strong overall. “I continue to see greater risks to price stability, especially while the labor market continues to be near estimates of full employment,” with the unemployment rate at 4.2%, she said.She said she worried that fast rate cuts might also unleash “a considerable amount of pent-up demand and cash on the sidelines,” possibly fueling inflation again, while monetary policy may also not be as restrictive as some Fed officials believe. More