The latest University of Michigan Consumer Sentiment Index, released Aug. 28, came in at 48.1 in September, falling from 51.7 in August, likely due to inflation worries and a lackluster economic outlook. Current economic conditions and consumer expectations were also slightly lower.

“Consumer sentiment ticked down less than four index points in September, reaching the lowest reading in four months and down 15% from January 2026,” said Surveys of Consumers Director Joanne Hsu. “Views of current and year-ahead expected personal finances both weakened about 10% this month, with concerns over high prices continuing to climb. Buying conditions for durables improved a bit, in part due to a perception that completing such purchases now would help consumers avoid higher prices in the future. 

“The short-run outlook for business conditions plunged amid renewed worries that elevated fuel prices and re-escalating trade disputes could pass through to the economy as a whole,” continued Hsu. “Overall, interviews reveal broad agreement across the political spectrum that the outlook for the economy has weakened since the beginning of the year. After particularly large declines in sentiment this month, Republican sentiment is now 20% lower than January 2026; Democrats are down 13% over the same period.” Year-ahead inflation expectations jumped from 4.0% last month to 4.6% this month, the highest reading since June. The current reading substantially exceeds the 3.4% seen in February before the Iran conflict began, along with all 2024 readings. Long-run inflation expectations ticked up to 3.4%, ending three consecutive months at 3.3%. These expectations remain higher than their 2024 range of 2.8% to 3.2%. 

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