US consumer confidence unexpectedly dropped in September on labor market concerns, according to survey data published Tuesday, signaling dampening optimism about the economy as November's presidential election approaches.
That could prove challenging for Democratic Vice President Kamala Harris given the economy remains a top issue for voters ahead of the election, in which she is running against Republican former president Donald Trump.
The Conference Board's consumer confidence index fell sharply to 98.7 in September, down from a revised 105.6 last month.
This was well below market expectations, according to Briefing.com.
"The deterioration across the Index's main components likely reflected consumers concerns about the labor market," despite the jobs market actually remaining quite healthy, The Conference Board's chief economist Dana Peterson said in a statement.
"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," she added.
The steep decline in September was the largest since August 2021, with all five components of the index falling, according to Peterson.
The biggest drop in confidence was seen among respondents between the ages of 35 and 54, and among consumers earning less than $50,000 per year.
"Consumer confidence plunged in August," economists at High Frequency Economics wrote in a note to clients published Tuesday. "The decay in the perceptions of jobs available was striking."
While the fall in confidence supports the Federal Reserve's decision to cut its key lending rate by half a percentage point last week, "it also will deliver a warning message about the state of the economy to financial markets," they added.