U.S. consumer confidence index falls more than expected, inflation expectations rise, Republican satisfaction hits lowest level during Trump's term

US consumer confidence saw a sharp decline in early September, hitting a new multi-year low. Continued rises in gasoline prices and ongoing trade tensions have jointly pressured the public, significantly deepening worries about living costs.

According to preliminary survey results released by the University of Michigan on Friday, the US consumer confidence index fell from 51.7 in August to 47.8 in September, below all forecast values in the Bloomberg economists survey. Consumer expectations for inflation over the next year jumped from 4% to 4.6%, with long-term inflation expectations for five to ten years also edging up to 3.4%.

This drop in confidence had clear triggers: gasoline prices reached the highest level on record for September, while ongoing US-Iran conflicts continued to push up energy costs, directly eroding the real purchasing power of American households.

The survey reflected responses collected between August 25 and September 7, a period marked by accelerating gasoline prices and rising trade tensions.

Meanwhile, on Friday, US August core CPI year-on-year at 2.4% marked the lowest level in five and a half years, with a month-on-month rise of 0.3% exceeding expectations and being the largest increase in four months. Traders estimate approximately a 90% probability of a Fed rate hike next week.

In this survey, the expectations index measuring future prospects saw a particularly steep drop, plunging from 51.5 to 45.8. The current conditions index was relatively stable, slipping slightly from 51.9 to 50.9.

Consumer assessments of the economic situation over the next year fell to the lowest level since July 2022, and evaluations of both current and future financial conditions deteriorated.

Notably, for the first time since 2023, a majority of consumers now expect the Fed to increase interest rates within the next year—this shift reflects deep-seated concerns in the market about the revival of inflation.

This decline in confidence showed a distinct bipartisan feature. The survey indicated consumer confidence fell across both parties, with only 35% of Republican respondents believing the government had performed well in economic management—a reading at its lowest since Trump’s return to the White House last year.

Joanne Hsu, survey director at the University of Michigan, stated in a release:

"Public ratings of government economic policy declined by about 10% this month and remain far below the levels in February 2026, prior to the outbreak of the Iran conflict. Notably, even among Republicans—who typically support the current government’s economic policy—their satisfaction has seen a significant drop."