Rick Wilking/Reuters
- A key measure of consumer sentiment fell by the most in nine months in September.
- The decline came as escalations in a trade dispute between the US and China cast a thick layer of uncertainty over the American economy.
- Consumers have fueled some of the brightest spots in the economy, which flashed a recession warning for the first time in more than a decade in August.
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A key measure of consumer sentiment fell by the most in nine months in September, as escalations in a trade dispute between the US and China cast a thick layer of uncertainty over the American economy.
The Conference Board, a private research group, said Tuesday its index of consumer confidence fell to 125.1 this month from 134.2 in August, the largest drop since January, as views of both the current state of the economy and the outlook weakened sharply.
That came after the largest economies raised tariffs on each other, hitting a far greater number of household products. Hundreds of American businesses have warned over the past year that they would have to either absorb those costs or pass them onto customers.
"The escalation in trade and tariff tensions in late August appears to have rattled consumers," said Lynn Franco, the senior director of economic indicators at the Conference Board. "While confidence could continue hovering around current levels for months to come, at some point this continued uncertainty will begin to diminish consumers' confidence in the expansion."
Consumers have fueled some of the brightest spots in the economy, which flashed a recession warning for the first time in more than a decade in August. But as Americans grow increasingly worried about tariffs, they could pull back on spending and investment.
"The correction was even bigger than we expected," Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said of the survey. "This time around, the tariffs on consumer goods likely are the culprit."