US Consumer Sentiment Sinks to Second-Lowest Level on Record as Inflation Expectations Jump

US consumer confidence deteriorated sharply in September, with the University of Michigan's final sentiment index falling to 48.1, a four-month low down from 51.7 in August and the second-weakest reading since the survey began in 1952, according to the Bloomberg and Reuters wire as aggregated by ground.news and reported by End Time Headlines. The final figure, released on Friday, September 25, 2026, was revised up from a preliminary 47.8 but landed below economists' consensus forecast of 47.6. The index now sits roughly 13% below its level a year earlier and about 15% lower than in January 2026, and the four weakest readings in the survey's 74-year history have all occurred within the past six months, with the record low set in May 2026. Alongside the sentiment slump, one-year inflation expectations jumped to 4.6% from 4.0% in August, the highest since June and well above the 3.4% recorded before the US-Israeli war with Iran disrupted global oil supplies, while five-year expectations rose to 3.4% after holding at 3.3% for three consecutive months.

What happened

The final September reading of 48.1 marked a decline of roughly 7% on the month and extended a slide that has now produced the second-lowest print in the index's history. The preliminary figure of 47.8 was revised modestly higher, but the final number still missed the consensus forecast of 47.6, underscoring that analysts had already anticipated a weak result and consumers delivered something close to it.

The deterioration was broad. Views of personal finances weakened about 10% during the month, with households expressing growing concern that rising inflation would erode their purchasing power. Joanne Hsu, director of the Surveys of Consumers, said interviews revealed "broad agreement across the political spectrum that the outlook for the economy has weakened since the beginning of the year," noting that Republican sentiment is now 20% lower than in January 2026 while Democrat sentiment is down 13% over the same period.

Inflation expectations moved in the wrong direction on both horizons. The one-year measure climbed to 4.6%, up from 4.0% in August and from 3.4% before the conflict with Iran began disrupting global oil supplies. The five-year measure rose to 3.4%, breaking out of a three-month hold at 3.3% and moving above the 2024 range of 2.8% to 3.2%. The wire figures were cross-checked against the ground.news aggregation after the Quartz report page returned an empty body.

Why it matters

The Federal Reserve raised interest rates earlier this month for the first time in three years, and the central bank watches long-run inflation expectations closely when setting policy. The rise in the five-year measure to 3.4%, above the range that prevailed throughout 2024, gives policymakers fresh evidence that households do not expect price pressures to fade quickly.

Economists point to energy costs as the immediate driver. Gus Faucher, chief economist at PNC Financial Services Group, told CNN: "Obviously, the biggest factor is the higher gasoline prices and higher diesel prices... Inflation has picked up over the past year or so because of tariffs and now the conflict in Iran. The end of the conflict does not appear imminent, and I think that people are feeling frustrated and concerned."

The risk flagged in the data is a wage-price dynamic: elevated expectations can lead consumers to spend sooner, demand higher wages, and prompt firms to raise prices in anticipation, embedding inflation rather than allowing it to subside. With sentiment down across party lines, the weakness is not confined to one political cohort, though the partisan gap is wide, with Republican sentiment down 20% since January against a 13% decline for Democrats.

How it is being covered

According to the ground.news aggregation, 60 sources are carrying the story, 39 of them rated, with a partisan split of 5% left-leaning, 62% centrist and 33% right-leaning. Right-leaning outlets dominate the framing around inflation and pre-midterm economic pessimism, and the left side is a clear blindspot at just 5% of coverage. Of the rated sources, 31 of 39 carry high or very high factuality ratings, with 6 mixed, 2 low and none rated very low.

What to watch

Watch the October preliminary sentiment reading in late October for confirmation of whether the slide continues or stabilises near these historic lows. The trajectory of one-year inflation expectations will be the key internal gauge: a move above 4.6% would signal that energy-driven price concerns are deepening, while a retreat toward the pre-war 3.4% level would suggest the June peak was transitory. The five-year measure at 3.4% deserves particular attention given the Federal Reserve's stated focus on long-run expectations, and any commentary from Fed officials ahead of the next policy meeting will indicate whether the September rate rise is followed by further action. Oil supply developments tied to the Iran conflict remain the underlying variable driving both gasoline prices and household expectations.

By the numbers

Source snapshot