Key points

  • Preliminary September consumer sentiment fell to 47.8 from 51.7 in August.
  • One-year inflation expectations increased to 4.6%; the longer-term measure rose to 3.4%.
  • The survey measures household expectations, with final September results due on September 25.

U.S. consumers became more pessimistic in early September while raising their expectations for inflation, according to the University of Michigan's preliminary survey released on September 11. The sentiment index dropped to 47.8 from 51.7 in August, below the 51.0 forecast in a Reuters poll of economists.

Households expected prices to rise 4.6% over the next year, compared with 4.0% a month earlier. Reuters independently reported both the weakening mood and the increase in expected inflation. Together, the readings suggest consumers are looking ahead to greater financial pressure even before any change in their actual spending is established.

Related reporting: Revised CLARITY Act sets rules for controlled DeFi protocols

The outlook weakens more than current conditions

The university's breakdown shows a sharper deterioration in expectations than in assessments of the present. Its expectations index fell to 45.8 from 51.5, while the current-conditions measure slipped to 50.9 from 51.9. The headline sentiment reading was down 7.5% from August and 13.2% from September last year.

Survey director Joanne Hsu linked the weaker outlook to renewed fuel-price pressure and trade tensions. She said consumers' expectations for their personal finances and near-term business conditions worsened. Longer-run inflation expectations edged up to 3.4%, following three consecutive months at 3.3%, a smaller movement than in the year-ahead measure.

Expectations and measured inflation are different

The survey arrived on the same day as the Bureau of Labor Statistics' August consumer price report. That release showed prices rising 0.4% on a seasonally adjusted monthly basis and 3.4% over the previous year. Gasoline prices increased 3.9% in August and accounted for more than a third of the monthly rise.

Those figures describe changes in prices already observed. Michigan's inflation questions ask households what they think will happen next. The 4.6% expectation therefore is neither a new official inflation reading nor a guarantee of the rate a year from now. Comparing the two can help explain the gap between recent price experience and consumers' outlook.

Why household confidence matters

The university's survey documentation explains why economists track these attitudes: major purchases and borrowing decisions depend partly on expectations about income, employment, prices and interest rates. Households considering a vehicle, a home or an expensive appliance may respond to uncertainty by postponing a commitment or rebuilding savings. Such choices can affect businesses selling those goods and services.

The survey asks about personal finances, business conditions and buying conditions, and follows up on respondents' reasons. It provides a view of how people interpret economic developments, complementing statistics on transactions and prices. It does not count how many purchases consumers actually canceled, and this release alone cannot establish a contraction in household spending.

A preliminary reading with a follow-up date

The university describes its regular monthly program as roughly 1,000 interviews, with households recruited through postal-address sampling. That describes the full survey process, not the number included in this preliminary release. The findings summarize a sample of households rather than every consumer's experience.

Michigan publishes an initial estimate around the middle of each month and a final release near month-end. Final September results are scheduled for September 25 at 10 a.m. Eastern Time. That update will show whether the deterioration remains as pronounced as more responses are incorporated; subsequent spending data will be needed to assess how expectations translate into behavior.

Sources

AI-generated editorial image; not a photograph of the reported event. Prepared with AI assistance and source verification.