Consumer sentiment dropped to its second-lowest level ever in September, according to the University of Michigan’s monthly survey.

The initial reading of its Index of Consumer Sentiment, a key indicator of consumer confidence in the U.S., was 47.8 — second only to its all-time lowest rating of 44.8 from May. The survey has been conducted since November 1952.

Economists polled by Reuters had predicted an index reading of 51, while a Wall Street Journal survey had projected a reading of 51.4.

Joanne Hsu, director of consumer surveys at the university, said that “Democrats and Republicans alike posted sizable declines,” while independents had little change from August.

Sentiment is now 16% below its February mark, prior to the start of the Iran war, and is 13% lower than its level from a year ago.

“Year-ahead expectations for both personal finances and business conditions plunged. With a resurgence in fuel prices and trade tensions, consumers anticipate greater pressures on their pocketbooks to come,” Hsu commented Friday. “Five-year expected business conditions remained stable at readings well below their historical average, suggesting that consumers believe that emerging risks this month may not have further worsened the long-run outlook.”

Hsu said year-ahead inflation expectations increased from 4% 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,” she added. “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%.”