University of Michigan Says Trade Disputes and High Prices Squeeze Consumer Sentiment

According to the University of Michigan’s Surveys of Consumers, consumer sentiment declined in September due to high prices and rekindled trade disputes. The Consumer Sentiment Index fell by 7% compared to the previous month and 12.7% compared to a year ago. Joanne Hsu, Director of Surveys of Consumers, noted that concerns over high prices weakened consumers' views of their current and future finances, and trade disputes dampened their outlook for business conditions.

The Index for Consumer Sentiment is now down 15% from January. Both Republicans and Democrats reported that their economic outlook has weakened since the beginning of the year, with Republican sentiment dropping 20% from January 2026 and Democrats down 13% over the same period. The Conference Board's Consumer Confidence Index, released on August 25, declined by 0.8 points to 89.4 in August from 90.2 in July.

The Present Situation Index rose by 6.8 points to 121.2, while the Expectations Index fell by 5.8 points to 68.2. The PYMNTS Consumer Expectations Index for September fell by 0.7 points to 54.1, with consumers' overall views of the economy, buying conditions, and job mobility weakening. Despite the decline, the index remained above 50, indicating that consumers are still more optimistic than pessimistic.

However, household savings are being depleted faster due to rising costs, similar to a car's fuel gauge burning fuel at an accelerated rate.