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The Conference Board’s Consumer Confidence Index fell 6.7 points to 81.9 in September, its sharpest drop in months, with both current conditions and future expectations deteriorating. Consumers’ 12-month inflation expectations rose to 6.1% on average, and 68.4% expected higher interest rates. The survey window (September 1-23) included a federal funds rate hike and ongoing geopolitical tensions.
The Conference Board Consumer Confidence Index fell 6.7 points to 81.9 in September, down from 88.6 in August, the business research group reported on September 29, 2026. The decline marked a notable deterioration after two months of softening, driven by weaker assessments of both current business and labor market conditions and a third straight monthly drop in consumer expectations. The survey window, September 1-23, coincided with a federal funds rate hike and ongoing geopolitical tensions.
The report’s two main components both moved lower. The Present Situation Index, which tracks consumers’ assessment of current business and labor market conditions, fell 7.9 points to 109.3. The Expectations Index, reflecting the short-term outlook for income, business and labor conditions, declined 5.9 points to 63.6, its third consecutive monthly decline.
Beneath the headline figures, the underlying survey responses weakened across the board. Net views of current business conditions — the share of consumers calling conditions “good” minus the share calling them “bad” — fell 3.4 percentage points to -1.9%, meaning more consumers rated business conditions as bad than good. According to the Conference Board, the drop was largely driven by more consumers reporting conditions as “bad.” The labor market differential — the share saying jobs are “plentiful” minus the share saying jobs are “hard to get” — retreated 2.5 percentage points to +1.7%.
All three components of the Expectations Index deteriorated. Net expectations for business conditions fell 3.2 percentage points to -9.5%, and net expectations for the labor market declined 3.1 percentage points to -14.4%. Net expectations for household income dropped 3.0 percentage points but stayed positive at +2.5%. Inflation expectations also rose: average 12-month inflation expectations climbed 0.3 percentage points to 6.1%, with the median at 5.1%. The share of consumers anticipating higher interest rates over the next 12 months jumped 5.2 percentage points to 68.4%.
Why Households Turning Gloomy Matters
Consumer confidence is watched closely because household spending accounts for the majority of U.S. economic activity. A sharp drop in both current-conditions and expectations measures can signal that consumers may pull back on purchases of big-ticket items in the months ahead — a particular concern for retailers, home improvement sellers and other discretionary sectors heading into the holiday shopping period.
The breadth of the September decline is notable. On a six-month moving average basis, confidence trended downward across all age groups and nearly all income groups, indicating the softening is not confined to one demographic slice. The Conference Board noted that while higher-income households remained generally more optimistic, those earning $125,000-$149,000 reported the greatest decline over the past six months — a segment that typically carries substantial discretionary spending power.
The report also landed against a contradictory backdrop: retail sales rose for an 11th consecutive month in August, according to previously reported government data. That divergence between what consumers say in surveys and what they actually spend leaves economists watching whether September’s gloominess foreshadows a spending slowdown or proves temporary.
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Recent Months of Eroding Sentiment
September’s 6.7-point drop did not come out of nowhere. The Conference Board’s chief economist said the index deteriorated “notably” in September only after two prior months of softening, suggesting a steady erosion in sentiment through the second half of 2026.
The survey period itself overlapped with two headwinds the report flagged: a federal funds rate hike during the September 1-23 response window and ongoing geopolitical tensions. Rising rate expectations also featured in the results, with more than two-thirds of consumers now expecting borrowing costs to climb over the next year.
One historical marker stood out in the data: consumer appraisals of current business conditions turned negative for the first time since September 2024. Stock market optimism, while still positive on balance, also moderated in September, according to the report.
What the Confidence Data Cannot Yet Show
It remains unclear whether September’s drop reflects a lasting shift in consumer behavior or a temporary reaction to events within the survey window, including the rate hike and geopolitical tensions. The Conference Board’s results are preliminary and based on responses collected through September 23, so any developments later in the month are not captured.
The gap between weakening confidence and continued retail sales growth also leaves an open question: sentiment surveys do not always predict actual spending. Whether households follow through on their pessimism by cutting purchases is not yet known.
The report does not break out the specific causes consumers cited for their gloomier outlooks, so the precise weight of inflation worries, rate expectations and job market concerns cannot be determined from these figures alone.
Watching for a Spending Slowdown
Economists and retailers will be watching upcoming data for confirmation of whether the sentiment decline translates into weaker activity. Key indicators include September and October retail sales figures, monthly job reports for signals on the labor market differential, and the Conference Board’s October Consumer Confidence release, which will show whether the September drop deepens or stabilizes.
The next Federal Reserve policy decisions will also matter for the outlook, given that 68.4% of consumers now expect higher interest rates over the next 12 months. Holiday-season sales performance — a critical period for retailers — will provide a concrete test of whether the confidence slide is weighing on spending.
Key Questions
How much did consumer confidence fall in September?
The Conference Board Consumer Confidence Index fell 6.7 points to 81.9 in September 2026, down from 88.6 in August, according to the report published September 29.
What do the Present Situation and Expectations indexes measure?
The Present Situation Index is based on consumers’ assessment of current business and labor market conditions; it fell 7.9 points to 109.3. The Expectations Index reflects consumers’ short-term outlook for income, business and labor conditions; it fell 5.9 points to 63.6, its third consecutive monthly decline.
Why did confidence drop in September?
The Conference Board did not assign a single cause, but the survey period (September 1-23) included a federal funds rate hike and ongoing geopolitical tensions. Consumers also reported higher inflation expectations, with average 12-month inflation expectations rising to 6.1%.
Does falling confidence mean consumer spending will fall?
Not necessarily. Retail sales rose for an 11th consecutive month in August even as sentiment softened. Confidence surveys gauge attitudes, not spending, and it remains unclear whether September’s decline will translate into weaker purchases.
Which income groups saw the biggest declines?
On a six-month moving average basis, confidence trended downward across all age groups and nearly all income groups. Households earning $125,000-$149,000 reported the greatest decline over the last six months, while higher-income groups remained generally more optimistic.
Source: rss
