Consumer Sentiment Plummets for Lower-Income Households

Core Insights - Long-run inflation expectations have increased for the second consecutive month, raising concerns about the sustainability of price stability in the future [1][8] - Consumer sentiment in the U.S. has sharply declined, particularly among lower- and middle-income groups, indicating heightened financial strain and vulnerability [1][3][6] Consumer Sentiment Trends - The latest consumer sentiment index has dropped to its lowest level since May, reflecting a growing caution among American households, especially those with lower incomes [3][4] - The sentiment index fell by 5% month-over-month and has accumulated a 25% decline over the first nine months of the year [3][5] Inflation and Economic Concerns - Forward-looking assessments within the consumer sentiment index saw a significant 7% decrease in September, standing 29% below December's levels [5] - The current index, which measures present consumer situations, contracted by 0.8%, totaling a 19% decrease over the nine-month period [5] Specific Consumer Concerns - Business conditions, labor markets, and inflation are the primary worries for consumers, with around 60% mentioning tariffs during interviews [7][10] - The Consumer Price Index rose by 0.4% in August and 2.9% over the past year, with notable increases in food prices [7] Inflation Expectations - Year-ahead inflation expectations remain steady at 4.8%, while long-run expectations have risen to 3.9% in September [8] - Consumers are increasingly aware of vulnerabilities in the economy, with current and expected personal finances easing by about 8% this month [9]