US Consumer Sentiment Drops to Lowest Since May on Job Loss, Inflation Fears

U.S. consumer sentiment has fallen to its lowest level since May, with the University of Michigan's preliminary September index dropping to 55.4 from 58.2 in August, reflecting growing worries about the economy, inflation, and job security. Consumers report increased risks to business conditions, labor markets, and personal finances, with fears of rising unemployment and personal job loss rising notably. Inflation expectations remain elevated, with year-ahead inflation steady at 4.8% and long-term inflation expectations increasing to 3.9%, signaling concerns about persistent price pressures. Tariffs and trade policy remain significant issues for about 60% of consumers, contributing to economic anxiety amid a cooling labor market and rising jobless claims. While some demographic differences in optimism exist, such as Democrats showing slightly improved expectations compared to Republicans and Independents, overall sentiment reflects broad-based economic vulnerability. These developments coincide with recent inflation data showing the highest annual increase since January, further influencing consumer confidence.