Preliminary Consumer Sentiment falls to 55.4 in September as inflation expectations rise

The University of Michigan announced on Friday that the preliminary reading of its Consumer Sentiment survey for August was 55.4. The data was well below expectations, as the consensus forecast of economists called for a reading of 58, and was also lower than August’s final reading of 58.2.

“Consumer sentiment moved down less than three index points in early September,” said Surveys of Consumers Director Joanne Hsu. “This month’s easing in economic views was particularly strong among lower and middle income consumers.”

Gold prices traded higher following the 10 am EDT data release, with spot gold last trading at $3,653.13 per ounce for a gain of 0.52% on the day.

The components of the September index showed declines in most areas, with longer-run inflation expectations rising and most areas of consumer spending reflecting the impact of high prices.

“Buying conditions for durables improved, while all other index components fell,” Hsu noted. “Consumers continue to note multiple vulnerabilities in the economy, with rising risks to business conditions, labor markets, and inflation. Likewise, consumers perceive risks to their pocketbooks as well; current and expected personal finances both eased about 8% this month.”

The report said that trade policy remains “highly salient” to consumers, with about 60% “providing unprompted comments about tariffs during interviews,” a similar number as in August. “Still, sentiment remains above April and May 2025 readings, immediately after the initial announcement of reciprocal tariffs.”

The inflation picture continued to deteriorate, with year-ahead inflation expectations holding steady at 4.8% while long-run inflation expectations moved up for the second straight month to 3.9% in September. “This current reading is considerably lower than the 4.4% seen in April,” Hsu said.