Consumer Sentiment Fell to Near-Record Low in September

The University of Michigan consumer sentiment index dropped 7% as inflation expectations climbed among households.

Updated on Sept. 25, 2026 in Inflation

Isometric editorial illustration of a fuel nozzle and hose resting on a concrete plinth, symbolizing energy-driven economic decline. — The University of Michigan consumer sentiment index dropped to 48.1 in September, the second-lowest reading in the survey’s history, as households struggle with rising energy costs. AI Illustration. Upload story photo >

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The University of Michigan consumer sentiment index fell to 48.1 in September, marking the second-lowest reading in the history of the survey. Rising gasoline and diesel prices, alongside broader inflationary pressures, have significantly dampened public outlook.

Why it matters

The decline in sentiment and rising inflation expectations indicate that households are feeling the brunt of higher energy costs and geopolitical instability. These trends could trigger a cycle where consumers demand higher wages, potentially pushing businesses to raise prices further.

The index reading of 48.1 represents a 7% monthly decline, with the four lowest readings in the survey history occurring within the last six months. Year-ahead inflation expectations have risen to 4.6%, while five-year projections climbed to 3.4%.

The players

University of Michigan

This institution conducts the long-running consumer sentiment survey that serves as a key indicator of US economic health.

Federal Reserve

The central bank of the United States is responsible for adjusting interest rates to manage inflation and stabilize the economy.

The details

The survey results reveal that both Republican and Democratic consumer sentiment have plummeted since January 2026, falling 20% and 13% respectively. Respondents cited higher energy prices, ongoing tariffs, and the US-Israeli conflict with Iran as primary drivers for the negative economic outlook.

The University of Michigan survey series has tracked sentiment since 1952.
January 2026 served as the baseline for political sentiment comparisons.
The record lowest consumer sentiment reading was set in May 2026.
The index fell 7% compared to August 2026 levels.
Current survey results were released in September 2026.

Macro View

This drop reflects a period of extreme economic pessimism, with the four lowest readings in the history of the survey occurring within the past six months. This trend mirrors historical periods of supply-side shock where volatility in energy markets disrupted broader consumer confidence.

The rise in inflation expectations suggests that households should prepare for continued upward pressure on the cost of living. As sentiment remains low, families may find that discretionary spending remains difficult while they manage rising energy expenses at the pump.

The takeaway

The sustained decline in consumer sentiment suggests that public confidence is highly sensitive to energy price volatility. Managing personal budgets during this period of high inflation expectations remains a critical necessity for households across the country.