Consumer Sentiment Dropped to Near-Record Lows

Higher fuel prices and inflation expectations have soured the mood for U.S. households this month.

Updated on Sept. 25, 2026 in Inflation

Bold flat-color editorial illustration showing a stylized fuel pump nozzle in navy and cream, evoking the impact of rising energy costs on the economy. — The University of Michigan consumer sentiment index fell to 48.1 in September, its second-lowest level on record, as inflation and energy costs strain U.S. household confidence. AI Illustration. Upload story photo >

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The University of Michigan consumer sentiment index fell to 48.1 in September, marking a 7% decline from August. This reading is the second-lowest in the survey history, which began in 1952.

Why it matters

Rising gasoline and diesel costs are primarily driving the dip in confidence, further exacerbated by broader concerns over inflation and geopolitical conflict. Persistent negativity can lead to a cycle where households expect higher inflation, potentially prompting businesses to raise prices and workers to seek higher wages.

Consumers now expect year-ahead inflation to reach 4.6% and long-run inflation to sit at 3.4%. These figures represent the second-lowest sentiment index reading on record, following four of the lowest scores occurring in just the past six months.

The players

University of Michigan

An academic institution that publishes the monthly consumer sentiment index tracking household economic outlook.

Federal Reserve

The central bank responsible for monetary policy, which enacted interest rate hikes in September 2026.

The details

The index is compiled through interviews measuring how households view their own personal finances and the overall economic outlook. Higher energy prices have constrained household budgets, fueling fears that inflation will remain elevated. These expectations are significant because they can influence real-world behavior, such as wage demands from workers and pricing strategies from businesses trying to manage costs.

1952: The University of Michigan consumer sentiment survey series began.
January 2026: The baseline period used for measuring political sentiment shifts.
May 2026: The month the index hit its record lowest reading.
August 2026: The period used for the monthly sentiment comparison.
September 2026: The current survey results were released.

Money Landscape

The current index remains historically depressed, following the record-low consumer sentiment reading from May 2026. This period of extreme pessimism reflects a trend where four of the lowest readings in the history of the survey have occurred within just the last six months.

If you are concerned about your own household budget, review how persistent inflation expectations might influence your long-term spending and savings goals. Consider discussing your personal financial strategy with a qualified professional to navigate potential price volatility.

The takeaway

Rising inflation expectations can sometimes create a feedback loop that sustains higher prices for consumers. It is a good time to track your own monthly household spending against your budget to identify categories most impacted by current price shifts.