Consumer Sentiment Fell to Near-Record Low in September
Business owners should prepare for higher wage demands as inflation expectations rise among U.S. consumers.
Updated on Sept. 25, 2026 in Inflation
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The University of Michigan consumer sentiment index dropped to 48.1 in September 2026, marking the second-lowest reading in the history of the survey. This decline reflects growing anxiety over inflation and rising energy costs, which could lead to shifts in labor and pricing strategies.
Why it matters
Rising inflation expectations are pressuring businesses to navigate higher wage demands while facing the prospect of increasing prices to cover costs. This shift is driven by volatility in fuel prices and international conflict, creating a challenging environment for near-term operational planning.
The sentiment index sits at 48.1, representing a 7% monthly decline and a 13% drop year-over-year. Consumer inflation expectations have risen to 4.6% for the year ahead and 3.4% for the next five years, fueling concerns over sustained cost pressures.
The players
Federal Reserve
The central banking system of the United States that manages monetary policy and recently hiked interest rates.
The details
The index decline is fueled by record-high concerns over gasoline and diesel prices, which are straining household budgets and dampening overall economic outlooks. As sentiment falls, businesses are seeing early signals that consumers may anticipate persistent inflation, potentially triggering demands for higher wages across sectors. Operators must now evaluate their payroll and pricing models as these long-run inflation expectations solidify.
Timeline
1952: The University of Michigan consumer sentiment survey series began.
January 2026: Baseline for political sentiment comparisons used in the survey.
May 2026: The record lowest consumer sentiment reading was established.
August 2026: The month prior to the current survey decline.
September 2026: The current survey results were officially released.
Market Landscape
The September decline follows a pattern established by the record low consumer sentiment reading from May 2026, marking the second-worst performance in the survey's history. This trajectory underscores a sustained period of economic pessimism, with four of the lowest readings in history occurring within the past six months.
Business operators should review their wage growth projections for the upcoming fiscal quarter to account for rising inflation expectations. Procurement managers should also monitor fuel-related surcharges, as energy prices remain the primary driver of current sentiment volatility.
The takeaway
The recent dip in sentiment suggests that consumers are increasingly bracing for long-term inflation, which complicates wage negotiations and pricing strategies. Managers should track five-year inflation expectations as a bellwether for potential pressure on future operating margins.
Further reading
For more on how rising prices impact operational costs, see our coverage on Inflation.
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