U.S. Consumer Confidence Declines, Inflation Expectations for the Next Year Rise to 4.6%

On September 25, data from a University of Michigan survey revealed that U.S. consumers' evaluations of their current and future personal financial situations have both declined by about 10%, amid heightened concerns over high prices. Conditions for purchasing durable goods have slightly improved, partly because consumers believe that buying now can help avoid future price increases. Consumers' expectations for short-term business conditions have significantly worsened, as the market is once again worried about high fuel prices and trade disputes potentially impacting the overall economy. The survey indicated that respondents from different political affiliations generally believe that the U.S. economic outlook has weakened compared to earlier this year. Following a significant drop in consumer confidence this month, confidence among Republicans has decreased by 20% compared to January 2026, while Democrats have seen a 13% decline during the same period. Inflation expectations for the next year have risen from 4.0% last month to 4.6%, marking the highest level since June and significantly above the 3.4% level from two months prior to the onset of the Iran conflict and all months in 2024. Long-term inflation expectations have slightly increased to 3.4%, ending a three-month streak at 3.3%, still above the range of 2.8% to 3.2% for 2024. Federal Reserve's Schmidt stated that U.S. debt appears to be very "extreme," and the Fed has yet to resolve the inflation issue.