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Consumer confidence drops as food, gas prices rise

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New data on consumer confidence shows that Americans are less confident about the U.S. economy, pointing to higher grocery and gas prices.

The Conference Board, a business research group that tracks consumer confidence, released the new data which showed a decrease in the month of August to 106.1, much lower than the roughly 116 figure experts predicted.

“Consumer confidence fell in August 2023, erasing back-to-back increases in June and July,” Dana Peterson, Chief Economist at The Conference Board, said in the announcement. “August’s disappointing headline number reflected dips in both the current conditions and expectations indexes. Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular.”

That concern matches recent cost increases. According to AAA, the national average price for a gallon of regular gasoline is $3.82, up from $3.75 a month ago. Diesel prices have spiked in the last month, up from $4.01 this time last month to $4.41 this week.

Food prices have soared in recent years, putting a strain on Americans’ budgets. In 2022, food prices rose about 10% far outpacing the already high inflation rate. In 2023, food prices rose significantly though at a much slower rate.

A recent analysis from the U.S. Department of Agriculture projects that food prices will continue to rise through 2024.

“Food prices are expected to continue to decelerate but not decline in 2024,” USDA said. “In 2024, all food prices are predicted to increase 2.8%, with a prediction interval of -2.0% to 7.9%.

Interest rates have soared as the U.S. Federal Reserve hikes rates to combat inflation, making borrowing money to buy a home far more expensive. Average rates nationally have topped 7%.

The group’s research also found that those surveyed are more worried about the labor market. The U.S. Bureau of Labor Statistics released its JOLT report Tuesday, which showed the number of available jobs dropped. The report showed that the number of open jobs declined to 8.8 million, down by-338,000.

“Expectations for the next six months tumbled back near the recession threshold of 80, reflecting less confidence about future business conditions, job availability, and incomes, Peterson said. “Consumers may be hearing more bad news about corporate earnings, while job openings are narrowing, and interest rates continue to rise—making big-ticket items more expensive.”

The confidence did vary by demographic.

“The pullback in consumer confidence was evident across all age groups—and most notable among consumers with household incomes of $100,000 or more, as well as those earning less than $50,000,” Peterson said. “Confidence held relatively steady for consumers with incomes between $50,000 and $99,999.”

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