Consumer Spending Fell As Borrowing Costs Rose In 2026
Higher interest rates have dampened confidence and reduced spending on big-ticket items like homes and vehicles.
Updated on Oct. 7, 2026 in Spending
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Consumer confidence dropped to a level of 81.9 in September 2026, marking its lowest point since 2014. This shift reflects a period where rising interest rates across the U.S. economy curtailed household spending on major purchases.
Why it matters
Higher borrowing costs have made financing expensive, causing households to pull back on discretionary budgets. This economic climate has disproportionately impacted sectors reliant on consumer credit for large-scale acquisitions.
Confidence fell to 81.9 in September 2026, the lowest level since 2014. The decline correlates with an 8% drop in the S&P 500 Consumer Discretionary ETF and significant share price falls for major retailers.
The players
Home Depot
A major home improvement retailer whose sales often track with consumer spending and credit access.
Lowe's
A national home improvement company sensitive to consumer confidence and borrowing conditions.
Tesla
An automotive and energy company whose vehicle sales are impacted by the cost of consumer financing.
The details
As borrowing became more expensive throughout 2026, household capacity for big-ticket purchases decreased. This trend specifically reduced demand in vehicle sales and home improvement projects, leading to an 18% share price decline for Home Depot, 25% for Lowe's, and 17% for Tesla since the start of the year.
Timeline
2014 was the previous low point for consumer confidence.
September 2026 saw consumer confidence fall to 81.9.
October 6, 2026, marked a daily gain for major market indices.
Money Landscape
The current economic environment reflects a significant tightening of credit access for households compared to recent years. This drop in sentiment aligns with the 2014 consumer confidence trough, highlighting a return to period-low levels for discretionary spending power.
Review your household budget if you are planning to finance big-ticket items like home renovations or new vehicles in the current high-rate environment. Discuss the total cost of credit with a qualified financial professional before committing to large installment debts.
The takeaway
When borrowing costs rise, discretionary budgets often feel the strain first. If your household is planning major purchases, review your debt-to-income ratio and consult with a qualified financial professional to determine if waiting for more favorable lending conditions is appropriate.
Further reading
For more on managing budgets during interest rate shifts, visit Spending.
Source note: This article includes information reported by ABC 10 News San Diego KGTV.
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