Consumer confidence took a sharp hit in September, falling to its second-lowest level on record as Americans grew increasingly worried about inflation and rising energy costs.
The University of Michigan’s Survey of Consumers posted a headline index reading of 47.8 in September, down 7.5% from August and off 13.2% compared to a year ago.
The only lower reading in the survey’s history, which dates back to 1952, came in May, when surging prices similarly rattled consumer confidence across the country.
Survey director Joanne Hsu pointed to growing anxiety about both household finances and broader economic conditions as central drivers of the decline.
“Year-ahead expectations for both personal finances and business conditions plunged,” Hsu said. “With a resurgence in fuel prices and trade tensions, consumers anticipate greater pressures on their pocketbooks to come.”
One-year inflation expectations jumped to 4.6%, a gain of 0.6 percentage points from the prior reading and the highest level since June of this year.
The current conditions index within the survey fell 1.9% from the previous month, while the forward-looking expectations measure dropped a steeper 11.1%.
Data released Friday by the Bureau of Labor Statistics showed gasoline prices climbed 3.9% in August and were up a striking 27.4% from the same period a year ago.
Fuel oil prices surged even more sharply, rising 10.1% month over month and soaring 52% on an annual basis, adding further pressure to household budgets nationwide.
The BLS also released its consumer price index Friday, showing annual inflation running at 3.4%, well above the Federal Reserve’s stated 2% target rate.
Traders responded quickly to the inflation data, pushing the odds of a Federal Reserve rate hike next week past 85% as markets absorbed the implications of persistently elevated prices.
The combination of weak consumer sentiment, surging energy costs, and sticky inflation paints a challenging picture for policymakers as they weigh the pace and duration of monetary tightening heading into the final months of 2026.
