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The Conference Board’s Consumer Confidence Index fell 6.7 points to 81.9 in September, its third straight monthly decline in expectations. Consumers turned negative on current business conditions for the first time since September 2024 and raised inflation expectations to 6.1%.
The Conference Board Consumer Confidence Index fell 6.7 points to 81.9 in September, down from 88.6 in August, the organization reported on September 29, 2026. The decline marks a third consecutive monthly drop in the Expectations Index and the first negative reading of consumer appraisals of current business conditions since September 2024, a signal that households are growing more pessimistic about both the present economy and the six-month outlook.
The survey’s two main components both weakened. 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, which measures the short-term outlook for income, business and labor conditions, declined 5.9 points to 63.6, its third consecutive monthly decrease.
Net views of current business conditions — the share of consumers rating conditions “good” minus those rating them “bad” — dropped 3.4 percentage points to -1.9%, with the decline driven largely by more consumers describing conditions as “bad.” The labor market differential, measuring those who say jobs are “plentiful” against those who say jobs are “hard to get,” retreated 2.5 percentage points to +1.7%.
Forward-looking measures deteriorated across the board. Net expectations for business conditions over the next six months 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 slipped 3.0 percentage points but stayed positive at +2.5%. Inflation expectations also rose: consumers’ average and median 12-month inflation expectations each increased 0.3 percentage points, to 6.1% and 5.1% respectively, while the share anticipating higher interest rates over the next year jumped 5.2 percentage points to 68.4%. The survey period ran September 1-23 and included a federal funds rate hike and ongoing geopolitical tensions.
Why Household Sentiment Matters for Spending
Consumer confidence is closely watched because household spending accounts for the majority of U.S. economic activity. A broad-based decline — spanning current conditions, future expectations and nearly all income groups — suggests households may become more cautious about discretionary purchases in the months ahead. For retailers, including the home improvement sector covered by Hardware Retailing, weakening sentiment can translate into softer demand for big-ticket and project-based purchases that consumers often defer when they expect the job market and business conditions to worsen.
The details compound the concern: pessimism is not limited to lower-income households. On a six-month moving average basis, confidence trended downward across all age groups and nearly all income groups, with the greatest decline reported among households earning $125,000-$149,000 — a demographic that typically drives a disproportionate share of consumer spending. Rising inflation expectations, coupled with the expectation of higher interest rates, add further pressure on household budgets and financing-sensitive purchases.
A Third Month of Declining Expectations
September’s drop follows two prior months of softening, according to The Conference Board. The Expectations Index has now declined for three consecutive months, while the sharper fall in the Present Situation Index in September marked an acceleration of the downturn in consumers’ assessment of current conditions.
The timing of the survey is notable: the September 1-23 collection window captured consumer reaction to a federal funds rate hike and continued geopolitical tensions, both of which can weigh on household outlooks. The report arrives against a backdrop in which retail sales had been more resilient — Hardware Retailing separately reported that retail sales rose modestly in August, marking an 11th consecutive month of gains. The divergence between still-growing sales and deteriorating confidence raises the question of whether spending can hold up if sentiment continues to weaken.
What the Confidence Data Cannot Predict
It is not yet clear whether September’s sharp decline represents a turning point or a one-month reaction to events during the survey window, including the interest rate hike and geopolitical tensions. Confidence surveys measure sentiment, not spending, and the relationship between the two can break down — retail sales have continued rising for 11 consecutive months even as confidence has softened.
The Conference Board described its September figures as preliminary results, meaning the numbers could be revised. The report also does not break down which specific factors — prices, rates, labor market worries or global events — drove the decline most. Whether higher-income households’ confidence continues to erode, and whether inflation expectations keep climbing, will only become apparent in coming months’ data.
Watch October Data and Holiday Spending
The Conference Board will publish its October reading in late October, which will show whether the September deterioration continued, stabilized or reversed. Analysts will also watch the Expectations Index closely: sustained readings well below current levels have historically been associated with weaker consumer spending patterns.
Near-term spending indicators — including monthly retail sales reports and early holiday shopping data — will test whether the 11-month streak of retail sales growth survives the decline in sentiment. Additional economic releases on employment, inflation and interest rates will shape consumer expectations in the interim, particularly the share of consumers anticipating further rate increases, which jumped to 68.4% in September.
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, from 88.6 in August. The Present Situation Index dropped 7.9 points to 109.3, and the Expectations Index fell 5.9 points to 63.6.
Why did confidence decline?
The Conference Board did not attribute the decline to a single cause. The survey period (September 1-23) included a federal funds rate hike and ongoing geopolitical tensions. Consumers turned more negative on current business conditions, the labor market outlook and future business conditions, while inflation expectations rose.
Which income groups lost the most confidence?
Confidence trended downward across all age groups and nearly all income groups on a six-month moving average basis. Households earning $125,000-$149,000 reported the greatest decline over the last six months, though higher-income groups remained generally more optimistic.
Does lower confidence mean spending will fall?
Not necessarily. Confidence measures sentiment, not actual spending. Retail sales had risen for 11 consecutive months through August even as confidence softened. However, sustained declines in the Expectations Index are watched as a potential warning sign for future consumer spending.
What do consumers expect for inflation and interest rates?
Average and median 12-month inflation expectations rose 0.3 percentage points to 6.1% and 5.1% respectively. The share of consumers expecting higher interest rates over the next 12 months jumped 5.2 percentage points to 68.4%. Consumers still expected stock prices to rise, though with moderated optimism.
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