US consumer sentiment fell to its second-lowest level on record in September as high gas prices further soured Americans’ views of the economy. The University of Michigan’s consumer sentiment index dropped to 48.1, a 7% decline from August and a nearly 13% drop from a year ago, according to data released Friday. The survey dates back to 1952, and the latest reading leaves Americans feeling worse now than they did during wars, the 1970s oil crisis, 9/11, the Great Recession, the Covid-19 pandemic and the inflation surge afterward.
Who Pays When Prices Jump
The people at the bottom are the ones absorbing the hit. The final reading for September marked a slight improvement from preliminary readings, but the broader picture stayed grim: the closely watched consumer sentiment gauge showed Americans deeply unhappy with their personal finances and the broader economy. The four lowest-ever readings for the index all occurred within the past six months, with the record set in May. That kind of collapse doesn’t happen in a vacuum. It lands on households already trying to survive higher-than-normal inflation and the compounding effects of fast-rising prices for the past five and a half years.
“Overall, interviews reveal broad agreement across the political spectrum that the outlook for the economy has weakened since the beginning of the year,” Joanne Hsu, director of the university’s Surveys of Consumers, said. “After particularly large declines in sentiment this month, Republican sentiment is now 20% lower than January 2026; Democrats are down 13% over the same period.” Even the language of the survey reads like a ledger of damage. Different parties, same squeeze.
The Oil Market Hits the Kitchen Table
Those cost-of-living concerns deepened this year as the US-Israeli war with Iran set off a monthslong conflict that negatively impacted the global supply of oil and escalated prices at the pump. Gus Faucher, chief economist at The PNC Financial Services Group, said in an interview with CNN, “Obviously, the biggest factor is the higher gasoline prices and higher diesel prices. People see that every day when they go to fill up their car.”
He added that people also hear news about how nominal record diesel prices have the potential to lead to more price hikes down the road. “Inflation has picked up over the past year or so because of tariffs and now the conflict in Iran,” he said. “The end of the conflict does not appear imminent, and I think that people are feeling frustrated and concerned.” The bosses of energy, trade, and finance don’t have to stand at the pump. Ordinary people do.
What the Numbers Say, and Who Watches Them
Friday’s survey also showed that consumers’ inflation expectations rose for this year and for five years from now. The year-ahead expectations shot to 4.6% from 4% in August, the highest reading since June. Before the start of the Middle East conflict, those year-ahead expectations were 3.4%. As of September, 3.4% is what consumers are expecting to see in the next five years. The long-run expectations moved up to 3.4%, ending three months in a row at 3.3% and above the 2024 range of 2.8%-3.2%.
The Federal Reserve tracks those expectations closely, and earlier this month it hiked interest rates for the first time in three years. That’s the apparatus at work: households get squeezed by prices, then the central bank answers with more pressure from above, all while the people who actually pay for the mess are told to brace themselves and call it policy.
The survey’s history makes the present look even harsher. Since 1952, the University of Michigan has measured consumer sentiment, and the current reading now sits near the bottom of that record. The four lowest readings have all come in the past six months. The system keeps producing the same result: rising costs, falling confidence, and a public left to absorb the damage while institutions trade explanations and rate hikes.