US consumer sentiment falls to 47.8 as year-ahead inflation expectations jump to 4.6%

US consumer sentiment fell for a second straight month in early September 2026. The University of Michigan's preliminary Index of Consumer Sentiment dropped to 47.8 from 51.7 in August, and was well below the 55.1 recorded a year earlier.

Survey director Joanne Hsu said sentiment is now 16% below its February level.

The components

• Current economic conditions: 50.9, down from 51.9
• Consumer expectations: 45.8, down from 51.5

Expectations fell much further than views of current conditions, so consumers are more worried about the months ahead than about their situation today.

Inflation expectations rise

For currency markets, the more important numbers are inflation expectations:

• Year-ahead: 4.6%, up from 4.0% in August
• Long-run: 3.4%, up from 3.3%

When households expect higher inflation, they may push for higher wages and accept higher prices, which can make inflation harder to bring down. Central banks watch long-run expectations closely for that reason.

The Fed connection

The preliminary reading came days before the Federal Reserve's decision on 16 September (preview). US consumer prices rose 3.4% in the year to August (CPI), and the Fed's preferred measure, the PCE price index, was 3.7% higher in the year to July (PCE).

The final September figures are due on 25 September. Sentiment surveys rarely move the dollar as much as inflation or jobs data, but a jump in inflation expectations adds weight to arguments against easing policy. The central bank targets behind those arguments are compared in inflation targets of the major central banks.