American consumer confidence has taken an unexpected hit, according to preliminary results from the University of Michigan’s monthly survey. The consumer sentiment index fell to 55.4 in September, down from 58.2 in August, signaling growing concerns about inflation, employment prospects, and trade tensions. This represents a 21% decline compared to last year, a period before tariffs began reshaping the economic landscape.
Survey director Joanne Hsu highlighted that tariffs remain a major concern, with 60% of consumers mentioning them unprompted during interviews. Inflation and a weakening job market are also contributing to the growing pessimism.
Economists had expected a slight improvement in sentiment, but the data instead shows Americans are worried about rising prices and potential job losses. Recent indicators suggest a divided economy, where wealthier households continue spending freely, while lower- and middle-income families tighten their budgets.
Adding to the worries are whispers of stagflation — a scenario where the economy slows significantly while inflation accelerates. Recent Consumer Price Index (CPI) data showed a 0.4% increase in prices last month, pushing the annual inflation rate to 2.9%. Meanwhile, first-time unemployment claims surged to their highest level in four years, and employers added just 22,000 new jobs in August, with the unemployment rate rising to 4.3%.
Analysts suggest these developments could prompt the Federal Reserve to cut interest rates in its upcoming monetary policy meetings to stabilize the economy.
