Consumer sentiment has declined more than analysts had anticipated in September, raising concerns among Americans regarding the impact of tariffs implemented by the Trump administration. According to the latest consumer sentiment survey released by the University of Michigan, the headline index for consumer sentiment registered at 55.4 for September. This figure is notably lower than the 58 predicted by economists surveyed by Bloomberg and represents a decline from August’s reading of 58.2.
Joanne Hsu, the director of the University of Michigan’s consumer surveys, indicated that a significant portion of respondents—about 60%—spontaneously mentioned tariffs during their interviews, maintaining a consistent concern from previous months. Hsu emphasized that consumers are increasingly aware of several vulnerabilities within the economy, particularly the rising risks affecting business conditions, labor markets, and inflation.
In addition to declining sentiment, Americans’ long-term inflation expectations have also seen an increase, with projections for the next five to ten years rising to 3.9% in September. This figure exceeds the 3.4% forecasted by economists and is higher than the 3.5% recorded in August. Despite this uptick, Hsu noted that the current expectations remain significantly lower than the April figure of 4.4%. Meanwhile, year-ahead inflation expectations remained unchanged from the previous month at 4.8%, aligning with economists’ estimates.
The release of this consumer sentiment report follows the recent Consumer Price Index (CPI) report for August, which indicated an uptick in inflation, directly highlighting the effects that tariffs have had on consumer prices. As economists and market analysts closely monitor these developments, a series of recent jobs data indicating a weakening U.S. labor market is expected to heavily influence the Federal Reserve’s forthcoming decision to cut interest rates later this month. However, uncertainty lingers regarding the magnitude of the rate cut and the potential for further reductions in the near future.
