Consumer sentiment fell to its second-lowest final reading on record in September as inflation and high gas prices kept squeezing American households.
The University of Michigan’s Surveys of Consumers posted a final September index of 48.1, a sharp drop from 51.7 in August and only a few points above the survey’s all-time low. In a report on the fresh data, ABC News noted the reading ranks as the second-worst final result in the survey’s 74-year history.
Shoppers are not reacting to a single bad week. They are living with prices that stay high, fuel costs that jumped after a major oil shock, and borrowing costs that keep climbing. That mix is souring the public mood across party lines.
The same survey found households expect inflation to rise further over the next year. Individuals also reported a worse view of their own financial outlook. Those two readings help explain why a soft sentiment number landed even while other parts of the economy still show growth.
Federal data cited in the report showed prices rose at a 3.4% annual rate in August, the most recent month on record. That is more than a percentage point above the Federal Reserve’s 2% inflation target.
Fed Chair Kevin Warsh addressed the problem at a press conference in Washington, D.C., last week. He did not soften the point.
Warsh said:
"The plain fact is that inflation is too high and has been for too long,"
That line matches what families already see at the pump and the checkout line. Official target charts do not pay the grocery bill. The gap between 3.4% and 2% is the gap between a goal and the cost of living people actually face.
AAA put the average U.S. price of a gallon of gas at $4.49. That level reflects a roughly 50% jump since war broke out in late February, an oil supply shock the report described as showing little sign of a quick fix.
The May sentiment crash sits in the same timeline. The index bottomed at 44.8 that month, just months after the Iran war began. September’s 48.1 reading is not that low, but it is close enough to show the public still has not recovered confidence.
Fuel is not a side issue for working households. When gasoline runs near $4.50, commuting, deliveries, and food distribution all get more expensive. The survey’s sour mood tracks that pressure.
Surveys of Consumers director Joanne Hsu said in a Friday statement that Democrats and Republicans alike posted sizable declines in sentiment from the prior month. The drop was not confined to one political camp.
That detail matters. When only one side’s voters sound alarmed, critics can wave it off as partisan noise. When both sides weaken at once, the driver is the household ledger, prices, rates, and cash left at month’s end.
A key long-term Treasury rate reached its highest level in nearly two decades on Wednesday. In the days that followed, the Federal Reserve raised benchmark borrowing costs again. Those moves feed straight into credit cards, car loans, and mortgages.
Market pricing through the CME FedWatch Tool later showed investors assigning a two-in-three chance of another quarter-point rate increase next month. In plain terms, traders still expect tighter credit, not relief.
For families already stretched by $4.49 gas and 3.4% inflation, higher loan costs compound the squeeze. Sentiment falls when people see less room to finance a car, a home, or even routine balances.
The economy is not frozen. Employers added 162,000 workers in August, according to the jobs report referenced in the coverage. Output also grew over the three months ending in June.
Those figures usually support confidence. They have not done so here. Hiring and headline growth do not cancel out a monthlong bout of inflation or an oil shock that still hangs over fuel markets. The University of Michigan numbers show shoppers judging their own finances more harshly even as the broader job count rises.
That split is the story. Payroll gains and a positive growth print can coexist with a public that feels poorer at the pump and the store. September’s 48.1 reading is the scoreboard for that lived experience.
From the May low of 44.8 to August’s 51.7 and back down to 48.1, the index has not found solid ground. Seventy-four years of survey history leave little room to call 48.1 normal. It is a stress signal.
Working families do not need another lecture on targets and tools. They need prices that stop outrunning paychecks, and leaders who treat that failure as the main event, not a footnote.