Consumer Sentiment Falls to 47.8 in September's Preliminary Read as Year-Ahead Inflation Expectations Jump to 4.6%

by Alina Castellanos · September 11, 2026

Economics Correspondent, US Market Current

The University of Michigan's preliminary September Surveys of Consumers put the Index of Consumer Sentiment at 47.8, the second straight monthly decline. The index stood at 51.7 in August, a drop of 3.9 points, and the survey reports the September level as 7.5% below the prior month and 13.2% below the 55.1 recorded a year earlier.

The two sub-indexes moved very differently, and that split is the story. Current Economic Conditions came in at 50.9 against 51.9 in August, down 1.9% on the month and 15.7% from a year ago. The Index of Consumer Expectations fell to 45.8 from 51.5, down 11.1% on the month and 11.4% from a year earlier. In points, expectations gave up 5.7 while current conditions gave up 1 — the deterioration is concentrated in how households see the year ahead, not in how they assess the present.

Joanne Hsu, who directs the Surveys of Consumers, said in the release that "Consumer sentiment receded less than 4 index points for the second consecutive month of decreases. Democrats and Republicans alike posted sizable declines, while independents were little changed from August." Hsu also reported that year-ahead expectations for both personal finances and business conditions plunged, and noted that sentiment now sits roughly 16% below its February level, before the start of the Iran conflict, and 13% below a year ago.

Inflation expectations went the other way. The survey's median year-ahead inflation expectation rose to 4.6% from 4.0% in August, which the release calls "the highest reading since June." The long-run measure ticked up to 3.4%, the release says, "ending three consecutive months at 3.3%." Both series moved higher in a month when the sentiment index itself fell, a combination that leaves the survey pointing in opposite directions on growth and prices.

The likeliest proximate cause was visible in a separate government release the same morning. The Bureau of Labor Statistics reported that the August CPI for All Urban Consumers rose 0.4 percent seasonally adjusted after a 0.1 percent increase in July, with the all items index up 3.4 percent over 12 months before seasonal adjustment. BLS states that the gasoline index rose 3.9 percent in August, accounting for over one third of the monthly all items increase — a contribution to the headline aggregate specifically, since gasoline sits inside energy and is excluded from the core index.

Over a longer horizon the pump is doing even more work. BLS puts the energy index up 16.3 percent over the past 12 months, due in large part to gasoline rising 27.4 percent over the same period. Core inflation, by contrast, came in at 0.3 percent for the month and 2.4 percent over 12 months, down from 2.5 percent in July. Households do not shop the core index; they shop the one gasoline is in.

Federal energy data corroborates the squeeze. The Energy Information Administration's weekly series for US regular all-formulations retail gasoline shows $4.157 a gallon in the survey week dated September 7, 2026 — the most recent week in the series, released September 9 — up from $4.071 in the week dated August 31 and $4.079 in the week dated August 3. The comparable week a year earlier, dated September 8, 2025, was $3.192 a gallon. That is close to a dollar a gallon of year-over-year increase showing up in every driveway, week after week.

A useful check on the Michigan numbers comes from the Federal Reserve Bank of New York, whose August Survey of Consumer Expectations was released on September 8 — before the latest leg higher in crude and before the CPI print. That survey found median one-year-ahead inflation expectations unchanged at 3.6%, the three-year measure down 0.1 percentage point to 3.2% and the five-year measure unchanged at 3.0%. The two surveys are not measuring the same thing in the same week, and the gap between a 3.6% New York Fed reading in August and a 4.6% Michigan reading in September is partly a gap in timing.

Where the New York Fed survey did move was on fuel. Median year-ahead expectations for gas price growth rose 1.7 percentage points to 4.6% in August. That was the single largest of the price-expectation moves in that release, and it points in the same direction the Michigan survey went a month later.

The New York Fed data also carries a labor-market warning that has nothing to do with prices. Mean expectations that the US unemployment rate will be higher a year from now rose 1.6 percentage points to 44.4%, which the release calls its highest reading since April 2020. The mean perceived probability of finding a job slipped 0.8 percentage point to 45.4%, just below its 12-month average of 45.5%, even as the mean probability of losing a job improved, falling 0.4 percentage point to 13.8%. Households also reported a higher mean probability of missing a minimum debt payment, up 1.2 percentage points to 13.2%, while median expected household spending growth rose 0.3 percentage point to 5.2%.

That combination — inflation expectations rising, labor-market expectations deteriorating, sentiment falling — is the uncomfortable configuration for a central bank that meets next week. The Federal Open Market Committee's published calendar lists a September 15-16 meeting, marked with an asterisk denoting a "Meeting associated with a Summary of Economic Projections," so policymakers will publish updated forecasts with the decision. A Quartz report stamped 13:29 UTC Friday — 9:29 a.m. ET — put the odds of an increase at that meeting at 90%, without naming the pricing source behind the figure. Such odds are market pricing, not a forecast of what the committee will do.

Several caveats belong on the Michigan figures. This is a preliminary estimate based on a partial month of interviews, and the final September reading is scheduled for September 25 at 10 a.m. ET and can differ from this one. Survey-based inflation expectations have also spent recent years running well above realized inflation, and Hsu's own note that partisan groups moved in different magnitudes is a reminder that the aggregate index averages populations whose readings can diverge sharply. None of the above is investment advice, and readers should be aware that consumer surveys have at times signaled weakness in spending that subsequent hard data did not confirm.