Consumer sentiment among Americans fell sharply in September, reaching a reading of 55.1, which marks one of the lowest levels since records began in 1952, according to the University of Michigan’s latest survey of consumers. This downward shift reflects a growing unease rooted in expectations of rising inflation, largely attributed to the ongoing effects of President Donald Trump’s aggressive trade actions.
The 5.3% decline from August’s reading of 58.2 signifies a 21.6% drop year over year. Although sentiment remains above the most recent low points seen in April and May of this year, the downward trend is broad, impacting various demographic groups across age, income, and education levels. The decline also spans the five key components of the sentiment index, which include evaluations of current economic conditions and personal financial outlooks.
Leading the concerns are fears that inflation will intensify. While year-ahead inflation expectations slightly eased to 4.7% in September from 4.8% the prior month, long-term inflation expectations have risen to 3.9% after climbing steadily over recent months. This signals persistent anxiety about inflation’s stickiness despite some short-term easing. Materials from the University of Michigan’s consumer surveys emphasize that 44% of consumers spontaneously cited high prices as a damaging factor to their personal finances, reaching the highest level in a year.
Much of this inflation anxiety is tied to the trade policy framework pursued by the President, which has introduced a complex array of tariffs on imports from numerous countries. These tariffs vary widely, lifting average U.S. tariff rates from under 2.5% to over 18% within the year, impacting goods ranging from steel and aluminum to automobiles and electronics. Despite legal challenges to the authority behind these tariffs, most have remained in place, causing companies to pass on cost increases to consumers. This has led to higher prices for everyday products and components in American supply chains, amplifying concerns about inflation’s reach.
The impact of tariffs on consumer sentiment extends beyond just price increases. Buyers are also tense about a potential hit to employment opportunities and overall business conditions. The University of Michigan survey showed that personal income expectations and financial outlooks fell by about 8% in September, reflecting fears that tightening economic conditions or rising costs could lead to tougher times ahead. Similarly, the labor market outlook weakened, adding another layer of uncertainty for American consumers.
Political divides remain evident in sentiment trends. In September, consumer confidence dropped about 9% for independents and 4% for Republicans but increased slightly among Democrats. This pattern underscores how interpretations of federal economic policies, including trade and inflation management, differ by political affiliation.
Despite these concerns, certain parts of the consumer outlook showed some resilience. For example, buying conditions for durable goods improved modestly in September, suggesting that not all spending areas are negatively impacted. However, the general mood remains cautious, with consumer confidence inching toward levels last witnessed in the spring months when tariffs were first announced and implemented.
Looking forward, these trends illustrate the continuing challenge for policymakers seeking to balance trade policies intended to protect and boost American industries with the risk of fueling inflationary pressures that directly affect household budgets. Higher prices, coupled with wavering confidence in job security and overall economic performance, could dampen consumer spending, which remains a vital driver of U.S. economic growth.
Americans’ concerns about rising prices and economic uncertainty shaped the sentiment survey results in a tangible way this September, revealing a clear link between the prevailing trade policy environment, inflation expectations, and consumer confidence.Â
