Consumer confidence has taken a sharp tumble in September, with the University of Michigan’s Survey of Consumers recording a headline index reading of just 47.8.
The September figure marks a 7.5% drop from August and a 13.2% decline compared with the same period last year, reflecting growing anxiety among households.
The reading is the second-lowest on record in data stretching back to 1952, with the all-time low coming in May when rising prices similarly rattled the economic outlook.
Survey director Joanne Hsu pointed to deteriorating expectations across multiple fronts as the key driver behind the dramatic monthly decline.
“Year-ahead expectations for both personal finances and business conditions plunged,” Hsu said, offering a stark assessment of the mood gripping American consumers.
She added that “with a resurgence in fuel prices and trade tensions, consumers anticipate greater pressures on their pocketbooks to come,” underscoring the dual forces squeezing household budgets.
One-year inflation expectations jumped to 4.6% in September, up 0.6 percentage points from the prior reading and matching the highest level recorded since June.
The current conditions index within the survey fell 1.9% from August, while the forward-looking expectations measure suffered an even steeper 11.1% decline month on month.
Rising energy costs are a central factor behind the worsening outlook, with Bureau of Labor Statistics data showing gasoline prices climbed 3.9% in August and surged 27.4% compared with a year ago.
Fuel oil prices rose even more sharply, jumping 10.1% in August and standing 52% higher on an annual basis, amplifying the financial strain on consumers already grappling with elevated costs.
The BLS also released its consumer price index on Friday, revealing that inflation is running at 3.4% annually, well above the Federal Reserve’s 2% target.
Traders reacted swiftly to the data, with odds of a Federal Reserve interest rate hike next week rising past 85% following the release of the inflation figures.
The combination of surging energy prices, persistent inflation, and trade tensions is creating a deeply uncertain environment for UK and global businesses monitoring American consumer health closely.
With consumer confidence at historically depressed levels, businesses exposed to discretionary spending face continued headwinds as households tighten their belts heading into the final quarter of 2026.