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46 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t ANALYTICS The laTesT consumer confidence Metrics Mixed Consumers are optimistic but cautious. a fter improving for four straight months, U.S. consumer con- fidence suffered a major setback in September as the labor market shows signs of losing momentum. The Conference Board re- ported a drop of nearly eight points in its monthly measure of consumer sentiment, putting the group's index at 86 from August's upwardly revised reading of 93.4. Economists had expected a slight nudge upward to 92.5 from an originally reported 92.4 the previous month. Declines were recorded in both component indices: The group's gauge of current economic condi- tions fell to 89.4 from 93.9, while the index measuring consumers' outlook fell to 83.7 from 93.1. Compared to August, con- sumers surveyed in September viewed business conditions slightly less favorably, with 23.4 percent saying conditions are good. Opinions of the job mar- ket deteriorated slightly more, with 15.1 percent of respondents saying jobs are plentiful and 30.1 percent saying employment is hard to find. Looking ahead, a smaller share of consumers anticipate job pros- pects will improve more than in August, while a growing number expect a downturn. The outlook for income growth was mixed. According to the Conference Board, the number of consumers expecting greater income in the coming months rose, measuring 16.8 percent in the September survey. At the same time, the proportion of respondents expecting a drop in income also climbed, reaching 13.4 percent. Meanwhile, as one metric drops, another is on the rise. Consumer confidence reached its highest level since the Great Recession in September, accord- ing to the Thomson Reuters and University of Michigan Surveys of Consumers. The index rose 2.5 percent over the month to 77.5. However, "confidence has repeat- edly failed to move above this level," according to the survey. September's increase in confi- dence is the result of optimistic outlooks on the overall economy and personal incomes. In fact, of the two components that make up the overall consumer senti- ment index—consumer expecta- tions and current conditions—a rise in the former is solely re- sponsible for the positive move- ment in September. The consumer expectations index rose 5.8 percent over the month of September, while the current conditions index fell 0.9 percent. September's optimism is a little past due, according to the survey's chief economist, Richard Curtin. "The defining aspect of the cur- rent recovery has been that opti- mism about future prospects has not improved in advance of actual economic gains," Curtin said. "Surprisingly, an improved economy has not sparked re- newed optimism, at least until recently," he continued. Consumers expressed expecta- tions of "modest" job growth over the next year, but they do not expect much change in the unemployment rate, according to the survey. Additionally, a growing num- ber of consumers expect their incomes to increase over the next year, albeit modestly. The median income growth expecta- tion reported in September was 1.1 percent, which is the highest expectation since late 2008. At the same time, more households an- ticipate income growth now than at any time since September 2008. "The renewal of income growth is particularly important for sparking increased consumer spending in the year ahead," Curtin said, adding that likely pending changes to monetary policy make income gains all the more necessary to elevate consumer spending.