Consumer moods in the US deteriorated early this month, according to the marquee gauge of household sentiment in America.
The preliminary read on University of Michigan’s index for September printed a woeful 55.4, down from August, the worst since May and a miss to the 58 consensus.
It was the second consecutive decline and left the headline uncomfortably close the record lows plumbed in June of 2022, when inflation was running 9% across the world’s largest economy.
Note from the figure that sentiment’s down (or unchanged) in all but two months for 2025. Not exactly what you’d expect from a new macro “golden age.”
Sarcasm aside, the inescapable bottom line is that between the tariffs and his generally mercurial approach to governing, Donald Trump’s creating a lot of uncertainty. I don’t think that’s debatable, nor is it a partisan assessment.
“This month’s easing in economic views was particularly strong among lower- and middle-income consumers,” survey director Joanne Hsu said Friday. Households, she remarked, “continue to note multiple vulnerabilities in the economy, with rising risks to business conditions, labor markets and inflation.”
The figure below shows you the expectations index. It touched what may as well have been a five-decade low earlier this year before staging a feeble recovery, but it too slipped a second month in September.
This month’s 7% drop took the outlook gauge down to 51.8, an abysmal read and hopelessly wide of the proverbial mark (economists wanted 56.2). The chart gives you some context for the COVID-era “vibecession,” which is continuing under Trump.
What’s different now is that the labor market’s rolling over, which means households will be compelled to grapple with job losses on top of stubborn inflation.
Although near-term inflation expectations were unchanged at 4.8% (still far too high) on the Michigan survey’s gauge, the longer run measure the Fed watches rose a second month to 3.9% which, if you strip out the “Liberation Day” shock, counts as a multi-decade high.
“Consumers perceive risks to their pocketbooks as current and expected personal finances both eased about 8% this month,” Hsu went on, adding that “trade policy remains highly salient to consumers, with about 60% providing unprompted comments about tariffs during interviews.”
