Americans became ‘more pessimistic’ about the labor market in August, while general confidence increased

Americans are becoming increasingly cautious about the labor market amid growing signs of weakening demand for labor, according to new data released Tuesday by the Conference Board.

Overall, the latest Conference Board consumer confidence index showed an increase in confidence this month, from 101.9 in July to 103.3. However, Conference Board Chief Economist Dana Peterson noted that consumer sentiment was “mixed” as concerns about the labor market grew.

“Compared to July, consumers were more positive about current and future business conditions, but they were also more concerned about the labor market,” Peterson said in a press release.

“Consumers’ assessments of the current labour market situation, while still positive, continued to weaken and assessments of the future labour market were more pessimistic. This probably reflects the recent increase in unemployment. Consumers were also somewhat less positive about future income.”

The report also found that consumers have become more cautious about the stock market after the sell-off in early August. Less than half of consumers expect stock prices to rise in the coming year.

Inflation expectations were more positive, however, with expectations for price increases over the coming year falling to their lowest level since March 2020. Confidence was also divided along demographic lines, with confidence falling in August for those under 35 and rising for those aged 35 and over.

In August, the Conference Board found that 32.8% of consumers said there were “plenty of jobs,” down from 33.4% in July. Meanwhile, 16.4% of consumers said jobs were “hard to get,” up slightly from 16.3.

The report comes at a time when recent economic figures show a weakening labor market.

In July, the unemployment rate hit 4.3%, the highest level in nearly three years, while the U.S. labor market added 114,000 jobs, the second-lowest monthly total since 2020.

This was followed by an upward revision to the monthly employment numbers released on August 21. The release showed that the U.S. economy employed 818,000 fewer people in March 2024 than originally reported, indicating that the labor market may have cooled much earlier than initially thought.

Data from the U.S. Bureau of Labor Statistics showed that the rate of people quitting their jobs, a sign of employee confidence, was 2.1% in July, the lowest level since August 2020.

Economists and the Federal Reserve have been more alert to signs of weakening in the labor market in recent weeks.

In a speech on Friday, Federal Reserve Chairman Jerome Powell said the labor market’s cooling is “undeniable” and that downside risks to the central bank’s full-employment mandate have increased.

The story continues

“It seems unlikely that the labor market will be a source of increased inflationary pressures anytime soon,” Powell said. “We do not seek or welcome any further cooling in labor market conditions.”

Economists therefore see the August jobs report, due out September 6, as a key indicator of whether recent signs of weakness in the labor market are worsening.

Economists polled by Bloomberg forecast Tuesday that the U.S. labor market added 160,000 jobs, up from 114,000 last month. Meanwhile, the unemployment rate is expected to fall to 4.2% from 4.3% a month earlier.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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