US consumer sentiment plunged to its second-lowest level on record in September, as working families faced the brunt of escalating gas prices and persistent inflation. The University of Michigan's consumer sentiment index registered 48.1, marking a 7% decline from August and a nearly 13% drop from a year ago. This near-record low follows four of the lowest-ever readings for the index occurring within the past six months, with the absolute record set in May.
Joanne Hsu, director of the university's Surveys of Consumers, noted a "broad agreement across the political spectrum that the outlook for the economy has weakened since the beginning of the year." Hsu added that Republican sentiment has fallen 20% since January 2026, while Democrats' views are down 13% over the same period. This indicates widespread economic distress regardless of political affiliation, as the costs of maintaining the current system weigh on all.
Gus Faucher, chief economist at The PNC Financial Services Group, directly linked this decline to "higher gasoline prices and higher diesel prices." He stated, "People see that every day when they go to fill up their car." Faucher further explained that "inflation has picked up over the past year or so because of tariffs and now the conflict in Iran." He concluded that "the end of the conflict does not appear imminent, and I think that people are feeling frustrated and concerned." This highlights how geopolitical maneuvers and trade policies directly translate into increased costs for the working class, serving capital accumulation through conflict and protectionism.
The Cost of Capital's Wars
Consumers' inflation expectations for the current year rose to 4.6% from 4% in August, reaching their highest reading since June. Before the Middle East conflict began, these year-ahead expectations stood at 3.4%, demonstrating the direct economic burden placed on households by imperial ventures. Long-run expectations also climbed to 3.4%, breaking a three-month streak at 3.3% and surpassing the 2024 range of 2.8% to 3.2%. These rising expectations signal a continued erosion of purchasing power for workers, a form of ongoing wage suppression as prices outpace any potential gains.
The State's Response
The Federal Reserve, an institution tasked with managing the stability of capital, closely monitors consumers' expectations about future price hikes. Earlier this month, the Fed hiked interest rates for the first time in three years. This move is often presented as a solution to inflation but frequently stifles economic activity and can lead to job losses for the working class, shifting the burden of economic adjustment onto labor. Reuters reported that a week of upcoming jobs and inflation data could challenge current expectations for the US rate path, indicating the precarious balance maintained by state economic managers as they navigate the contradictions of the system.