Mixed Economic Signals: Strong Jobs Report, but Declining Confidence

Monday (Oct. 7) marked a double dose of economic data that provided a continued diet of mixed signals. First up, the Federal Reserve’s latest data on consumer credit showed an overall slowdown in the annualized gain for credit overall in August, ratcheting down to a 2.1% pace, down sharply from 6.3% in the previous month. Mix that with a decidedly weak show of consumer confidence via the Conference Board — after a monster job report last Friday (Oct. 4)— and the series of Fall sale events scheduled starting today with Amazon Prime Days starts to become another gut check for economic health.

Let’s start with revolving credit, which includes cards. It actually slipped during September to a negative 1.2% annual rate, where the reading had been a jump of 9.4% in August. The read across? Card debt has declined, the second decline seen in the past three months. Paying down card debt may signal that cardholders are priming the pump to spend into the fall.

But at the same time, non-revolving debt, such as student loans and card loans, gained 3.3%, annualized, in August, and had been 5.2% higher in July. Consumers took on arguably “larger ticket” debt while simultaneously pulling back a bit on the card spending, at least into the first months of fall. Loading up on one “tranche” of debt may leave less room to spend at the retailers’ online or in-store settings. PYMNTS Intelligence data indicate that 43% of the population revolves their debt.

In addition, consumer confidence waned a bit last month, and a newly-out leading indicator of employment signals some caution. Autumn may be an important referendum on the health of the US consumer.

As PYMNTS Intelligence reported last month , 70% of Americans report feeling stressed about their personal finances, with 75% of adults aged 18 to 34 expressing significant financial anxiety. Though last week’s job numbers topped expectations, they may also tamp down the pace or at least the size of central bank rate cuts, which in turn would keep interest rates on debt relatively high.

Some of the bellwethers of retail are seemingly girding themselves for some of that anxiety to translate into reticence to spend, as they’ve kept hiring plans for the season on par with past years, but not adding extra staff signals a possible wariness of what’s to come.

As reported last week , Amazon plans to hire 250,000 workers for the upcoming holiday season. The figure is in keeping with “last year’s hiring levels and comes as retailers are preparing for a shopping season that could be marked by consumer hesitancy,” PYMNTS wrote. Another major retailer, Target, announced in September that it is keeping its holiday hiring levels the same as in 2023, with plans to take on 100,000 seasonal workers.

Separately, The Conference Board Employment Trends Index, released Monday (Oct. 7), showed that the overall Index reading slipped to 108.5 last month, down from an upwardly revised 109.5 level in August.

The Conference Board has noted that the Index represents a “leading” indicator of how payroll-based employment will fare. When the Index increases, jobs grow; the converse is true when the Index slips.The Board noted that while topline payrolls gained 253,000 and the unemployment rate fell, the ETI components from the September jobs report — employment in temporary help services and share of involuntary part-time workers — were both largely flat.

“With many companies fully restaffed to prior levels, jobseekers have begun experiencing challenges entering the market at this stage,” Mitchell Barnes , labor markets economist at The Conference Board, said in a statement that accompanied the release.

The share of respondents who report “jobs are hard to get” — an ETI component from the Consumer Confidence Survey — rose for the fifth consecutive month to 18.3% in September 2024.

The Conference Board’s employment gauge comes on the heels of the Board’s Consumer Confidence Index (one of the aforementioned components) retreated in September, and marked the largest decline seen in roughly three years, reflecting persistent anxieties among American households about the trajectory of the economy and the resilience of the labor market.

The September reading underscores the fragility of consumer sentiment amid a backdrop of elevated inflation, rising interest rates and a looming possibility of an economic slowdown.

“The expectations index was 4.6 points lower at 81.7. We’re inching closer to the critical 80 level — because a reading below that level usually correlates to a recession,” we reported late last month.

The end result is that a more tepid outlook for near-term prospects, in terms of prices, the labor market, and jobs, which is a read across for what we might term “upward wage mobility,” will lead to at least some hesitancy to open one’s wallet at the register, or buy into the looming holiday shopping sales.