U.S. consumer confidence drops to a four-month low in September, short-term inflation expectations rise to 4.6%

According to Jinse Finance APP, as rising energy prices further intensify American households' concerns about the cost of living, US consumer confidence continued to deteriorate in September, falling to the lowest level in four months. Meanwhile, both short-term and long-term inflation expectations among consumers rose, and their views on the economic outlook and personal finances also weakened significantly. Final survey data released on Friday by the University of Michigan showed that the US consumer confidence index fell to 48.1 in September, declining further from August and hitting a four-month low.

Inflation expectations have clearly heated up. US consumers expect prices to rise by 4.6% over the next year, higher than 4% in August; the average annual inflation expectation for the next five to ten years rose to 3.4%, the highest level since May this year.

High Energy Prices Worsen Living Cost Pressure

As consumer confidence deteriorated in September, US diesel prices soared to a record high, and gasoline prices also continued to climb. For ordinary households, the rising cost of refueling has further magnified longstanding discontent over persistently high living costs. At the same time, overall US inflation remains stubborn. Prices are rising faster than wage growth, and mortgage rates have already surpassed 7%, reaching the highest in more than two years, further increasing the burden of home purchases for many families.

Joanne Hsu, director of the University of Michigan’s consumer survey, stated: "Despite political differences, consumers unanimously believe the economic outlook has worsened." The survey showed that since the beginning of this year, consumer confidence has declined across all types of groups in the US, regardless of age, education, region, political party, or income level.

Economic Outlook Expectation Falls to Lowest Since 2022

Consumers' concerns about the future economic situation are particularly evident. The indicator measuring the economic outlook for the next year fell sharply in September, dropping to the lowest level since 2022; at the same time, expectations for future personal finances also worsened further.

The expectations index dropped to a four-month low, and the indicator reflecting current economic conditions also declined, indicating that US consumers are not only more pessimistic about the future, but are also downgrading their assessment of the current economic environment.

This change is noteworthy because consumer spending has been a crucial force supporting US economic growth. If persistent high prices, energy costs, and borrowing costs further erode household purchasing power, the willingness to spend may face even greater pressure.

Durable Goods Purchasing Intentions Improve Slightly, But Due to 'Fear of Higher Prices Later'

It is worth noting that consumers’ assessment of conditions for purchasing durable goods improved slightly in September, but this change does not entirely mean that consumers are more optimistic about the economy. Hsu pointed out that part of the improvement actually stems from consumers believing it is better to make large purchases now rather than later to avoid further price hikes in the future.

In other words, the willingness of consumers to buy durable goods such as cars and home appliances has improved in part because inflation concerns are prompting earlier demand, rather than greater confidence in future income or the economic outlook.

The latest survey covers consumer feedback between August 25 and September 21.