US Consumer Sentiment Index Declines to Second-Lowest Level on Record

US consumer sentiment fell to its second-lowest level on record in September 2026, as high gas prices negatively impacted Americans’ views of the economy. The University of Michigan’s consumer sentiment index for September decreased to 48.1, reflecting a 7% decline from August and a nearly 13% drop from the same month last year, according to data released on September 25, 2026. This survey, which dates back to 1952, indicates that Americans are currently feeling worse than during significant historical events, including wars, the 1970s oil crisis, 9/11, the Great Recession, and the COVID-19 pandemic. The four lowest readings for the index have all occurred in the past six months, with the lowest recorded in May 2026. The final reading for September showed a slight improvement from preliminary readings. The consumer sentiment gauge indicates that Americans are dissatisfied with both their personal finances and the overall economy. Joanne Hsu, director of the university’s Surveys of Consumers, noted that there is widespread agreement across the political spectrum that the economic outlook has weakened since the beginning of the year. Republican sentiment has decreased by 20% since January 2026, while Democratic sentiment has dropped by 13% over the same period. US households have faced higher-than-normal inflation and rising prices for over five years. Concerns about the cost of living have intensified this year due to the US-Israeli conflict with Iran, which has disrupted global oil supply and increased prices at the pump. Gus Faucher, chief economist at The PNC Financial Services Group, stated that higher gasoline and diesel prices are significant factors affecting consumer sentiment. He also mentioned that inflation has risen due to tariffs and the ongoing conflict in Iran. The survey indicated that consumers’ inflation expectations have also increased, with year-ahead expectations rising to 4.6% from 4% in August, the highest since June. Prior to the Middle East conflict, year-ahead expectations were at 3.4%. As of September, consumers expect a long-term inflation rate of 3.4%, up from 3.3% for three consecutive months, exceeding the 2024 range of 2.8%-3.2%. These inflation expectations are closely monitored by the Federal Reserve, which raised interest rates for the first time in three years earlier this month. If consumers anticipate continued price increases, they may choose to spend more now and demand higher wages, prompting businesses to raise prices, which could further drive inflation.