The University of Michigan's monthly survey revealed that consumer sentiment fell to a headline index of 47.8 in September, marking a 7.5% decline from August and a 13.2% decrease year-over-year. This reading is the second lowest since the survey began in 1952, with only May's figure being lower.
Joanne Hsu, the survey director, noted that expectations for personal finances and business conditions have worsened, driven by rising fuel prices and ongoing trade tensions. The one-year inflation outlook increased to 4.6%, the highest since June, indicating heightened inflation fears among consumers.
Additionally, Bureau of Labor Statistics data showed gasoline prices rose 3.9% in August and are up 27.4% year-over-year, while fuel oil prices surged 10.1% and are 52% higher than last year.
As a result, traders are now anticipating a Federal Reserve rate hike next week, with the probability exceeding 85% following the release of the consumer price index, which indicated an annual inflation rate of 3.4%, significantly above the Fed's 2% target