Consumer Confidence Hits 12-Year Low as Prices Squeeze Shoppers

A sharp drop in September

Americans ended the summer in a worse mood about the economy than at any point in more than a decade. The Conference Board's Consumer Confidence Index fell 6.7 points in September to 81.9, down from 88.6 in August.12 That was well below expectations. Reuters-polled economists had forecast 89.2, Dow Jones had 89, and at least one tracker cited a consensus near 90.151314 Whichever forecast you use, the miss was large. The reading was the lowest since 2014 and the third straight monthly decline.1316

The weakness showed up across the survey. The Present Situation Index, which measures how consumers see current business and labor conditions, fell 7.9 points to 109.3. The Expectations Index, which covers the six-month outlook, fell 5.9 points to 63.6.1920 The Conference Board treats an Expectations reading below 80 as a historical sign of recession within a year, and the index has been under that line since February 2025.11

The detail that stands out most is about household finances. For the first time in the four years the question has been asked, more respondents called their family's current financial situation "bad" than "good."1513 Net views of current business conditions also turned negative for the first time since September 2024.19 Dana Peterson, the Conference Board's chief economist, said the index had deteriorated notably after two earlier months of softening.11

The preliminary 81.9 was later revised up to 84.2, which the October release used as its base.210 The revision doesn't change the main finding. Associated Press coverage described the September result as the weakest since April 2014 and lower than the worst point of the pandemic.3

Prices drove the decline

Coverage of the release agrees on the cause: prices. In the survey's write-in answers, mentions of the high cost of goods and services, and of oil and gas prices in particular, reached record levels, which Peterson tied to the September surge in fuel costs.1720 AAA reported that the national average gas price in late September was the highest on record for that time of year.20 Average 12-month inflation expectations rose 0.3 points to 6.1%, and the median rose to 5.1%.15

The survey period, September 1 to 23, also included a federal funds rate hike.11 The share of consumers expecting higher interest rates over the next year jumped 5.2 points to 68.4%.15 Inflation running well above target while the Fed raises rates hits households twice: everyday goods cost more, and so does carrying a balance.

The gloom was not limited to one political group. Confidence fell among Democrats, Republicans and independents in September. On a six-month average it trended down across all age groups and almost every income bracket.15 The University of Michigan survey points the same way. Its sentiment index fell 7% in September to its second-lowest reading on record, and its director said people across the political spectrum broadly agree the outlook has weakened since January.1320

The grocery aisle

Gas prices drove the headline, but grocery data shows the steadier, longer-running pressure on household budgets. Yahoo Finance reported that grocery prices kept rising sharply in August and early September because of tariffs, energy costs and supply-chain problems.5 Acosta Group's Affordability Tracker found that the share of shoppers comfortable affording groceries and household essentials fell from 68% in January to 53% in August. Over the same period, the share who felt uncomfortable rose from 17% to 26%.9

Shoppers are changing their habits. In the six months to August, 43% of shoppers cut back on nonessentials because of higher prices, 38% bought more store brands and 35% switched to cheaper stores.9 Acosta's 84-item "Typical Stock-Up Trip" basket cost $366.42 in the four weeks ending September 5. That is up 3.5% from a year earlier and about 31% above the 2020 level.9 Wage growth has slightly reduced the hours of work needed to buy that basket, but Acosta's own analyst said the gains give households little relief.9

Retail sales data shows the same pattern. Siebert's Mark Malek pointed out that September grocery store sales rose 0.9% from a year earlier while food-at-home prices rose 1.8%. In other words, shoppers spent more and brought home fewer items.1 Excluding gas stations, September retail sales grew just 0.2%, a change the Census Bureau considers statistically indistinguishable from zero.1 Stronger spending in some categories hides a split. Restaurant sales grew 7.0% year over year, well ahead of menu price increases, which suggests households with more savings are still spending freely while others trade down.1

Subscriptions are getting cut

Recurring digital bills are one of the first places stretched budgets show up. Ipsos found that 39% of Americans canceled at least one streaming subscription in the six months through mid-September, up from 29% in March. The firm linked the cancellations to price increases on top of higher grocery, fuel and heating costs.32 A separate CableTV.com survey found that 36% had canceled a streaming service in the past year, and 43% of those who canceled said the service had become too expensive.36

The price increases are well documented. Netflix raised all three US plans in March, putting its ad-free Standard tier at $19.99.39 Peacock raised prices again in August, YouTube Premium's individual plan went up $2 to about $16 in April, and Amazon raised the fee to remove Prime Video ads from $3 to $5.37 Gaming subscriptions are also affected. Circana data showed cost was the main reason for more than 40% of cancellations of the basic Xbox and PlayStation tiers, and for half of Nintendo Switch Online cancellations.32

Not all of the evidence points one way. Alphabet said YouTube Music and Premium passed 150 million subscribers in the third quarter despite price increases in the US.34 And 44% of people who cancel a streaming service don't replace it, but others switch platforms or move to free ad-supported services.36 The likely explanation is that consumers are getting choosier rather than abandoning subscriptions. Services seen as essential keep their customers, and the rest get canceled when money is short.

Credit stress is real but uneven

Credit data is where coverage disagrees most. The New York Fed reported that credit card balances rose $21 billion in the second quarter to $1.26 trillion, and auto loans reached a record $1.71 trillion.2223 New flows into serious credit card delinquency edged up to 6.97% from 6.93% a year earlier, and auto loans rose to 3.00% from 2.93%.22 The bank's economic policy advisor said delinquency rates for most products have held steady for two years but that new delinquencies on auto loans and cards remain elevated.22

The more alarming numbers need context. The share of card balances more than 90 days delinquent rose from 7.6% to 12.8% between late 2022 and early 2026. However, the New York Fed's economists attribute much of that rise to old charged-off debts that lenders keep reporting for longer, not to more borrowers falling behind.21 Equifax data likewise showed delinquency rates improving across mortgages, auto loans and cards.29

Auto lending is the clearest exception. The share of auto balances 90 or more days late was 5.49% in the second quarter, close to a record. Young borrowers are falling into serious delinquency at almost three times the rate of borrowers in their sixties.28 Philadelphia Fed research suggests much of that backlog comes from loans that are taking longer to resolve, not from a sudden wave of new defaults.28 Meanwhile, the personal saving rate has fallen to 4.1%.1 Our reading is that household credit is not breaking, but more households are covering gaps by borrowing and saving less.

Feelings vs. spending

The main question is how much the decline in confidence matters when spending has held up. Axios noted that the September confidence report came out alongside data showing a still-solid job market.17 Commentary on the Conference Board data pointed out that business surveys were improving that same week, widening the gap between how consumers and companies see the economy.14 A Bloomberg Opinion column argued that one explanation for the gap deserves the most attention from policymakers: that strong overall numbers are hiding real problems.8

October offered some relief. The Conference Board index rose 7.5 points to 91.7 as average gas prices fell to $4.27 from $4.48 a month earlier.2 Even so, the Conference Board's own economist said confidence remains on a long-term downward trend, and consumers plan to spend less on services and big-ticket goods over the next six months.4 Expected inflation remains elevated at 5.8%.4 Diesel prices are rising, which affects how much it costs to ship goods to stores.15

The rebound followed lower gas prices, and gas prices could rise again. Grocery bills, subscription increases and growing card balances have not eased. With affordability expected to be a central issue in the midterm elections, the September low looks less like a one-off reaction to a fuel spike and more like a sign that household budgets are under lasting strain.35