US consumer sentiment falls in September, inflation expectations rise

U.S. consumer sentiment weakened in early September, with both the University of Michigan and Conference Board surveys showing declines, as concerns about inflation and the job market persisted.

The University of Michigan's Surveys of Consumers reported its Sentiment Index fell to 47.8 in early September from 51.7 in August, missing economists' forecasts of 51.0. The survey indicated that sentiment sagged among both Democrats and Republicans, while remaining little changed among Independents.

"With a resurgence in fuel prices and trade tensions, consumers anticipate greater pressures on their pocketbooks to come," said Joanne Hsu, the director of the Surveys of Consumers. The measure of consumer expectations for inflation over the next year jumped to 4.6% from 4.0% in August, and expectations for the next five years edged up to 3.4% from 3.3%.

The Conference Board's Consumer Confidence Index also declined, falling to 94.2 in September from 97.8 in August, marking its lowest level since April. This decline followed a smaller drop in August and a rise in July. The Present Situation index weakened, and the Expectations Index declined for the second consecutive month. The percentage of respondents assessing business conditions as "good" fell to its lowest point since April, while the percentage viewing jobs as "plentiful" decreased.

Write-in responses to The Conference Board survey showed that mentions of prices and inflation increased, becoming the primary concern for consumers. While mentions of tariffs declined, they remained elevated. Government data released earlier in September showed that consumer prices rose 2.9% in August from a year earlier, up from 2.7% in July, with core prices increasing 3.1%. The unemployment rate stood at 4.3% in August, the highest since October 2021, and job openings remained steady at 7.2 million.