Consumer Confidence Index Falls to 81.9, Lowest Reading Since 2014

A survey that broke a 12-year floor

American consumers ended the summer more pessimistic than at any point in more than a decade. In September, the Conference Board's Consumer Confidence Index fell 6.7 points to 81.9. Economists in the Dow Jones consensus had expected 89.22 It was the lowest reading since April 2014, and it came in below the trough the index hit during the pandemic.30 It was also the third monthly decline in a row. Both the Present Situation Index, which fell 7.9 points to 109.3, and the six-month Expectations Index, which slipped 5.9 points to 63.6, moved down.26

The Conference Board's chief economist, Dana Peterson, said consumers' view of current business conditions had turned negative for the first time since September 2024. She also said that write-in answers mentioning prices, and oil and gas costs in particular, reached new highs as fuel prices surged during the month.21 The board collected its responses between September 1 and September 23.23

The survey's most striking finding concerns household finances. More respondents described their family's financial situation as bad than as good. Outlets described that milestone differently. CNBC called it the first time in the four-year history of the question.21 Investopedia's write-up said it was the first such reading since 2022.25 A third report called it only the second negative reading since the question was introduced.26 Whichever framing is right, the point is the same: the gloom has moved from the national economy to people's own budgets.

Fuel, not groceries, is the immediate trigger

The topline story is about rising prices, but the details point to a cause many readers might not expect. Grocery inflation is cooling. Food-at-home prices fell 0.1% in September and were up 1.8% from a year earlier, according to the Bureau of Labor Statistics.11 That was down from 2.2% annual grocery inflation in August.14 Earlier, the USDA had cut its full-year 2026 forecast for food-at-home inflation to 2.4%, though it still expected beef and veal to rise 9.4% and fresh vegetables 5.7%.17

Energy is doing most of the damage to household budgets. Headline CPI rose 0.6% in September and 3.7% from a year earlier, an acceleration that coverage of the report blamed on energy.19 In the Midwest, the regional energy index was up 22% from a year ago.15 Regular gasoline was averaging about $4.46 a gallon when the confidence survey was released.29 Coverage ties the fuel shock to the war with Iran, which began on February 28. Since then, the Fed's preferred PCE inflation measure has climbed from 2.8% to 3.7% as of June.23

Our reading is that the grocery aisle is where shoppers feel energy-driven inflation, even though grocery prices aren't what's rising fastest. Several factors support this. Prices that went up in earlier years have not come back down. A falling annual rate still means groceries cost more than a year ago.14 The basket is also very uneven. Rice and coffee were each up 7.1% over the year, candy rose 7.7% and carbonated drinks 4.7%, while butter fell more than 10% and eggs dropped sharply.1619 Eating out costs more too, with restaurant prices up 3.5% from a year ago.19

Interviews in local coverage show how this plays out. One Texas shopper described choosing between the power bill and groceries.28 A North Carolina resident said the money she set aside for gas and lunches ran out well before the month ended.27 Economists in the same coverage said high fuel and transportation costs keep pushing up retail prices.27

Wages make the squeeze worse. Average hourly pay rose 3.1% from a year earlier in August, the weakest annual gain since May 2021.23 After taxes and inflation, disposable income didn't grow at all that month, even though consumer spending rose 0.9%. The saving rate stood at 4.1%.28 Households are expecting more inflation, too. On average, respondents expect prices to rise 6.1% over the next year, and the median expectation is 5.1%. Both figures rose 0.3 percentage points from August.22

The job market looks steadier than people feel

Labor-market worries are the second driver, and here the hard data and the survey diverge. The gap between people who say jobs are "plentiful" and those who say they are "hard to get" narrowed to just 1.7 percentage points.21 More than a quarter of respondents, 28.4%, expect fewer jobs over the next six months. That is roughly twice the share expecting more.26

The official numbers are less alarming. Employers added 162,000 jobs in August and unemployment held at 4.1%, though some of that low rate reflects people who stopped looking for work.23 Weekly jobless claims fell to 197,000 in mid-September, a sign that layoffs remain rare.26 Job openings fell to 7.08 million in August, but hiring ticked up and layoffs eased slightly.21 A personal-finance analysis concluded that the job market is softening but not collapsing.24 We agree. Consumers seem to be pricing in a deterioration that the payroll data hasn't shown yet. That gap matters because a weaker job market is what turns a squeeze into defaults.

Delinquencies: two ledgers, two stories

Credit data is where the coverage disagrees most, and the disagreement is informative. From the big lenders' point of view, things look fine. Wells Fargo said early-stage delinquencies are at historically low levels and that charge-offs fell from both the prior quarter and the prior year. Its CEO still expects credit to weaken "at some point."2 U.S. Bancorp said spending stayed strong "despite sentiment," although its 30-to-89-day card delinquency rate rose to 1.35% from 1.17%. The bank attributed the rise to an acquisition and to seasonal patterns.8 The commercial-bank card delinquency rate fell to 2.85%, and JPMorgan and Citi also reported stable or improving card metrics.1

Borrower-level data looks much worse. The Philadelphia Fed reports that in the past year, the shares of borrowers with delinquent auto and credit-card debt hit their highest levels in more than 20 years, above the peaks of the Great Recession and the pandemic. Nationally, 9.3% of auto borrowers have severely delinquent debt, and 13.8% of consumers have debt in collections.3 The Fed's 2025 Survey of Consumer Finances found that nearly 20% of families had fallen behind on debt payments, up from about 12% in 2022. That is the worst reading since 2010.9 Other reports put the share of card balances at least 90 days past due at roughly 13%, the highest since the financial crisis.106

These accounts can both be true. The Philadelphia Fed notes that much of the rise in severe card delinquency comes from older charged-off debt piling up, not from a wave of new missed payments.3 Banks report on loans that are still performing. Household surveys count everyone who is struggling, including debts that have already been written off. Borrowing costs add pressure on both. The average rate on card accounts charged interest reached 22.36% in August, while revolving credit actually shrank at a 4.2% annualized pace.1 The Federal Reserve raised rates for the first time since 2023, bringing its benchmark to about 3.9%, and signaled another hike may come.23

One columnist offers the most useful framework: stretched households keep their card payments current by cutting back elsewhere, so the stress shows up in restaurant traffic and retail discounting before it reaches bank charge-offs.1 McDonald's, Domino's and Kohl's have all described pressure on lower- and middle-income customers, although each also has problems of its own making.1 The stress is also concentrated. In Pennsylvania, card delinquency in low- and moderate-income neighborhoods is more than double the rate in middle- and upper-income areas.3

What it means

Put together, the coverage points to a K-shaped consumer economy under pressure from fuel. Wealthier households with investment gains keep total spending growing, while others cut back on discretionary purchases to cover essentials.28 Pessimism has spread beyond one political camp. Confidence fell among Republicans, Democrats and independents.26 Over the past year, Republican confidence dropped 15 points, against 5 for Democrats and 4 for independents.28 With the midterms weeks away, analysts expect the mood to hurt the president's party.2428

Our view is that sentiment won't recover until gas prices do. PNC's senior economist made the same point, saying confidence is unlikely to improve much before the Middle East conflict is resolved and fuel costs fall.25 The data to watch is the overlap of high card rates, a rising Fed funds rate and any crack in hiring. Banks' delinquency numbers will likely be the last place it shows up. Spending plans are already giving early warnings: intentions to buy homes and cars edged lower, and consumers cut plans for hotel stays, airfare and movies.26