U.S. consumer sentiment dipped again in September, with respondents to a closely tracked survey by the University of Michigan noting “multiple vulnerabilities in the economy, with rising risks to business conditions, labor markets and inflation.”
The university’s Index of Consumer Sentiment, which gauges attitudes on various economic issues, fell 4.8% this month to a preliminary reading of 55.4 after posting a final mark of 58.2 in August. Economists polled by Reuters had predicted a reading of 58.0.
The index, which is benchmarked to a value of 100 equaling the sentiment in the first quarter of 1966, is based on telephone interviews with consumers across the U.S.
Following a summertime boost of spirits, when the index reached as high as 61.7 in July, consumer pessimism is now approaching the despondent levels seen in April and May. In those months, back-to-back readings of 52.2 reflected consumers’ growing fears about the inflationary impacts of the Trump administration’s recently announced tariff policies.
Those tariff-related concerns have resurfaced, according to Joanne Hsu, director of Surveys of Consumers at the university.
“Trade policy remains highly salient to consumers, with about 60% of consumers providing unprompted comments about tariffs during interviews,” Hsu noted.
She added that “this month’s easing in economic views was particularly strong among lower- and middle-income consumers,” with current and expected personal finances both easing about 8% this month among survey respondents.
A separate University of Michigan index that tracks consumer expectations declined even further this month, falling 7.3% to 51.8 from 55.9 in August.
Consumers project inflation will hit 4.8% over the next 12 months before easing to 3.9% in five years’ time. While those percentages would represent steep increases in consumer prices, current consumer expectations have been tempered from April, when survey respondents forecast year-ahead inflation of 6.5% and five-year price increases of 4.4%.
On Thursday, the Bureau of Labor Statistics reported a 2.9% annual increase in the consumer price index (CPI) in August, spurred by rising housing and grocery costs. The CPI, a widely watched measure of inflation, increased 2.7% on a 12-month basis in July.
