US Consumer Confidence Crashes to 81.9 in September, Far Below Forecasts, as Inflation Fears and Rate Anxiety Mount

The Conference Board's Consumer Confidence Index plunged 6.7 points to 81.9 in September, missing economist forecasts of 89.0 by the widest margin in recent memory and prompting comparisons to the collapse seen during the COVID-19 pandemic. The prior month's reading was also revised down to 88.6 from 89.4, compounding the deterioration. The drop marked the lowest reading in more than a decade and hit across every demographic, political affiliation, and income bracket.

The Present Situation Index fell to 109.3 from 117.2, as consumers' views on current business conditions turned negative and assessments of the jobs market worsened. The Expectations Index, which measures consumers' six-month outlook, declined to 63.6 from 69.5, driven by weaker business and labor outlooks. On a six-month moving average, the steepest confidence declines were seen among households earning $125,000 to $149,000 annually, while Gen Z and Millennials led the drop by age group.

Inflation anxiety intensified alongside the confidence drop. The average 12-month inflation outlook rose 0.3 percentage points to 6.1%, and the median outlook climbed to 5.1%. The share of consumers anticipating higher interest rates surged 5.2 percentage points to 68.4%, reflecting widespread concern that the Federal Reserve will continue raising rates. Elevated Treasury yields and oil-driven inflation fears have kept bond markets under pressure, further weighing on sentiment.

US equity futures edged higher on the day as oil prices and Treasury yields pulled back modestly from recent multi-year highs, providing some relief. Gold gained ground amid geopolitical uncertainty and persistent rate concerns, though analysts cautioned that its upside remained limited given the continued strength in the dollar.