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Consumer sentiment deteriorated sharply in September as Americans confronted higher grocery and gasoline prices, according to the University of Michigan survey. The headline index sank to 48.1 from 51.7 in August, reaching a four month low.

The September result came in slightly above the Street’s expectation of 47.5. Even so, the decline showed that households had become more pessimistic about the economy as rising prices strained their outlook.

Consumers also reported a weaker view of their personal finances. Expectations for personal finances fell by about 10%, adding another negative signal to a survey already burdened by concerns about fuel, food, trade, and broader business conditions.

Joanne Hsu, the survey’s director, pointed to a sudden deterioration in expectations for commerce. Her comments connected consumers’ worsening outlook with elevated fuel prices and renewed trade tensions.

“The short-run outlook for business conditions plunged amid renewed worries that elevated fuel prices and re-escalating trade disputes could pass through to the economy as a whole,” Hsu said in the release.

Trade policy remained one of the pressures hanging over consumers. After talks between the US and Canada collapsed in late August, President Trump imposed 50% tariffs on about $20 billion worth of Canadian goods.

Relations between the US and China followed a different path during the period. Treasury Secretary Scott Bessent announced this week that the two countries would extend their current trade truce, while negotiations are scheduled to continue in early 2027.

The survey’s weakness was not confined to one political group. Hsu said the economic outlook held by consumers across the political spectrum has weakened since the beginning of the year.

Inflation expectations delivered another warning. Americans’ outlook for inflation over the coming year climbed to 4.6% in September from 4% in August, marking the highest reading since June.

The September figure also stood far above the 3.4% inflation expectation recorded in February. It was higher than every reading reported during 2024, reflecting how sharply expectations have shifted from levels seen earlier.

Inflation had remained elevated in August, while the war with Iran continued. Against that backdrop, rising fuel costs were weighing directly on household perceptions of the economy and their expectations for future price increases.

Gasoline has become a particularly visible source of financial pressure. Average prices have risen by more than $1.50 since the war began, according to AAA, and they are now moving toward $5 per gallon nationwide.

The burden is even greater in California. Average gasoline prices in the state have climbed above $6 per gallon, putting them well beyond the already elevated national level described in the survey report.

Long term inflation expectations also moved higher in September. The measure increased to 3.4% after remaining at 3.3% for three consecutive months, ending a stretch of unchanged readings.

Those longer range expectations have recently stayed above the levels recorded during 2024. The range last year was 2.8% to 3.2%, below the 3.4% reading reported for September.

The latest survey therefore showed weakness in both current sentiment and expectations for the future. Consumers reported deteriorating views of their personal finances, business conditions, and the path of inflation as grocery and gasoline costs remained prominent concerns.

The fall from 51.7 to 48.1 placed overall sentiment below its August level and at its weakest point in four months. Meanwhile, both the one year and long term inflation readings moved higher, leaving price concerns at the center of the September report.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.