American consumer sentiment fell to its second-lowest reading on record in September as inflation and high gas prices continued to hammer household budgets across the country.
The University of Michigan’s final consumer sentiment index registered at 48.1 for September, the second-lowest final reading in the survey’s 74-year history, ABC News reported.
Shoppers are still living with prices that refuse to settle. Federal data show prices rose at a 3.4% annual rate in August, more than a full percentage point above the Federal Reserve’s 2% target.
That gap is not an abstraction at the pump or the checkout line. It is the reason confidence cracked again after a brief summer bounce.
The average price of a gallon of gas in the United States stood at $4.49, according to AAA. That is roughly a 50% jump since the Iran war began in late February.
An oil supply shock with little sign of a quick fix has kept energy costs elevated. Households feel that every week, not only when a survey arrives.
May’s reading of 44.8 marked the historic low, coming just months after the war’s outbreak. By August the index had ticked up to 51.7. September’s 48.1 reverse erased most of that modest gain.
Surveys of Consumers director Joanne Hsu said in a Friday statement that Democrats and Republicans alike posted sizable declines from the prior month. The squeeze is not limited to one party’s voters.
Fed Chair Kevin Warsh addressed the damage directly at a press conference in Washington, D.C., last week. Persistently elevated prices, he said, have continued to take a toll on shoppers.
“The plain fact is that inflation is too high and has been for too long,” Warsh said.
That admission matches what families already know from grocery receipts and fill-ups. It also lands as the central bank has raised benchmark borrowing costs in response to prices that will not cool on schedule.
Markets are not treating the fight as finished. The CME FedWatch Tool showed investors assigning a two-in-three chance of another quarter-point rate hike next month.
A key long-term Treasury rate hit its highest level in nearly two decades on Wednesday, days after the Fed’s latest move. Higher long-term rates raise the cost of mortgages, car loans, and business credit on top of the prices already straining budgets.
Those market moves echo earlier strain, including when Treasury yields climbed to multi-year highs as policymakers prepared to tighten.
The broader economy has not been frozen. Employers added 162,000 workers in August, and output grew over the three months ending in June.
Yet the sentiment index still sank. Paychecks and headline growth have not offset the daily reality of 3.4% inflation and $4.49 gas.
That pattern fits the same price pressure tracked in the August inflation report, which showed costs still climbing while the Fed weighed further action.
When the cost of living stays above target for this long, soft survey numbers are not a mystery. They are a scoreboard.
Consumers have now watched inflation outrun the Fed’s goal, watched fuel costs surge with the war-related supply shock, and watched borrowing costs rise in response. Confidence near the worst levels in three-quarters of a century is what that combination produces.
Officials can point to jobs and quarterly growth. Shoppers are pointing at prices that remain too high, and the survey is recording the result.
Hardworking families should not need a historic low on a university index to prove that inflated prices and costly energy still dominate the kitchen table.