US consumer sentiment has seen a notable decline in September, reflecting growing concerns among Americans regarding employment prospects and inflationary pressures. The University of Michigan’s preliminary Survey of Consumers reported an overall sentiment index drop to 55.4, marking a 4.8% decrease from August’s figure of 58.2. This current sentiment level is the lowest observed since May, and it represents a staggering 21% drop from the same period last year.
Joanne Hsu, director of the survey, commented that consumers are expressing increasing worries about various vulnerabilities within the economy. “Consumers continue to note multiple vulnerabilities in the economy, with rising risks to business conditions, labor markets, and inflation,” she stated. She further noted that perceived risks to personal finances have also become more pronounced, with expectations for both current and future financial circumstances dipping about 8% this month.
Regarding inflation, year-ahead expectations of price increases remained steady at 4.8%, the same as reported in August. Consumers’ anxiety about tariffs has also come to the forefront, with Hsu indicating that a significant 60% of respondents made unprompted remarks about these levies during their interviews.
In a related finding, expectations for employment conditions are troubling, with approximately 60% of consumers anticipating worsened job prospects in the year ahead—a figure reminiscent of sentiments from the Great Recession. Preliminary data for September reveals that around 65% of consumers expect unemployment rates to rise over the next 12 months.
These consumer sentiment findings coincide with a series of disappointing economic reports released recently. Notably, revisions to the jobs data indicated a decline of 13,000 payrolls in June, marking the first net loss since December 2020. Additional revisions suggested that the workforce is actually 911,000 smaller than originally reported over the past year. Moreover, a New York Fed survey released on Monday highlighted that respondents perceive the likelihood of finding a job after losing their current one as being at a record low since June 2013.
Inflation metrics have also raised alarms, as the Consumer Price Index reflected a 2.9% year-over-year increase in August. This culmination of economic indicators paints a daunting picture for consumers, who remain apprehensive about the future state of the economy and their overall financial wellbeing.
