WASHINGTON — Americans are becoming dramatically more pessimistic about the economy as rising prices, expensive fuel, weaker hiring and elevated borrowing costs squeeze household confidence ahead of the crucial holiday-spending season.
The Conference Board Consumer Confidence Index fell 6.7 points to 81.9 in September 2026, down from a revised 88.6 in August.
That was substantially worse than economists expected.
Reuters reported that economists had forecast a reading of 89.2, meaning September’s drop represented a significant downside surprise.
More importantly, the index fell to its lowest level since April 2014 — more than 12 years ago.
The reading was also below the worst level recorded during the Covid-19 pandemic, underscoring how deeply frustrated consumers have become even though the U.S. economy has not entered a comparable shutdown or mass-unemployment crisis.
The decline was widespread.
Reuters said confidence deteriorated across political affiliations, age groups and income levels, suggesting Americans’ worries are extending beyond any single demographic or partisan group.
Consumers Are Worried About Both Today and Tomorrow
The Conference Board divides its confidence survey into two major components.
Both deteriorated.
The Present Situation Index, which measures consumers’ views of current business and labor-market conditions, fell 7.9 points to 109.3.
The Expectations Index, measuring consumers’ six-month outlook for income, employment and business conditions, dropped another 5.9 points to 63.6.
September marked the third consecutive monthly decline in expectations.
That number deserves attention because the Expectations Index has historically been watched as a potential recession signal when it remains below 80 for a sustained period.
At 63.6, Americans are not simply unhappy with current conditions.
They are increasingly concerned that conditions could deteriorate further.
Prices Are Becoming the No. 1 Problem Again
Inflation was the most visible source of anxiety.
Conference Board Chief Economist Dana Peterson said consumers’ written responses became increasingly negative and that references to prices, the high cost of goods and services, and particularly oil and gasoline prices rose sharply.
Consumers’ average 12-month inflation expectations climbed to around 6.1%, according to reporting on the survey.
That is significantly higher than the Federal Reserve’s 2% inflation target and reflects what consumers actually feel when buying groceries, fuel and other everyday necessities.
The increase in energy costs has been particularly damaging to sentiment.
The Middle East conflict pushed fuel prices higher in 2026, feeding through to transportation, delivery and production costs.
Reuters noted that diesel prices had reached record levels, while consumers were simultaneously facing higher grocery bills and mortgage rates.
That combination is especially painful because consumers cannot easily avoid essentials.
People may delay buying a television or taking a vacation.
They cannot stop buying food or commuting to work.
More Americans Say Their Finances Are Bad
One of the most concerning signals in CNBC’s report was the deterioration in Americans’ perceptions of their own household finances.
More respondents described their personal finances as bad rather than good, reflecting the cumulative impact of several years of elevated prices.
That distinction matters.
Consumer confidence surveys can sometimes fall because people are worried about politics or conditions elsewhere in the economy even when their own finances remain stable.
But when households themselves begin reporting deteriorating financial conditions, spending behavior can eventually change.
And consumer spending accounts for roughly two-thirds of U.S. economic activity.
If households reduce discretionary purchases because they feel financially insecure, the slowdown can spread rapidly through restaurants, retailers, travel companies, automakers and other industries.
The Job Market Is Becoming the Bigger Warning Sign
Inflation may be Americans’ most immediate concern.
But employment could be the more important economic signal.
Only 23.6% of consumers said jobs were plentiful in September, down from 24.5% in August and the lowest share since February 2021.
Meanwhile, 21.9% said jobs were hard to get, up from 20.3% and the highest reading since January 2021.
That caused the Conference Board’s closely watched labor-market differential — the difference between those saying jobs are plentiful and those saying they are difficult to find — to collapse to just 1.7 percentage points, down from 4.2 points in August.
That measure matters because it has historically moved alongside the U.S. unemployment rate.
When consumers increasingly say jobs are difficult to find, unemployment often rises afterward.
Job Openings Fell to 7.08 Million
Consumers’ concerns were backed by government data released the same day.
U.S. job openings fell by 256,000 to 7.079 million in August, according to the Labor Department’s Job Openings and Labor Turnover Survey.
Economists had expected around 7.225 million vacancies.
The ratio of available jobs to unemployed workers slipped to approximately 1.01, down from 1.06 in July.
That ratio reached about 2 openings for every unemployed worker in 2022, when companies were desperately competing for employees.
The change illustrates just how dramatically the labor market has cooled.
Several industries experienced particularly large declines.
Professional and business services lost 119,000 open positions, while healthcare and social assistance had about 115,000 fewer vacancies.
Government, manufacturing and construction openings also declined.
But Companies Still Aren’t Firing Many Workers
There is an important contradiction.
Job opportunities are shrinking.
But mass layoffs have still not arrived.
Layoffs and discharges fell by about 61,000 to 1.641 million in August, the lowest level in 17 months.
Hiring increased slightly to approximately 5.19 million, although much of the increase came from state and local government.
The quits rate — measuring workers voluntarily leaving jobs — remained at a subdued 1.9%.
That creates what economists increasingly describe as a “low-hire, low-fire” labor market.
Companies are reluctant to expand payrolls.
But they are also reluctant to fire existing employees.
For people who already have secure jobs, that can feel relatively stable.
For unemployed workers, younger people entering the workforce or employees hoping to change careers, conditions feel considerably worse.
September’s Jobs Report Later Confirmed the Slowdown
The concern expressed by consumers in the September survey was subsequently reinforced by the official September employment report.
The U.S. economy added only 29,000 jobs in September, far below expectations, while unemployment rose to 4.2%.
That means consumers were sensing labor-market weakness even before the official payroll numbers fully confirmed it.
The dynamic is important because consumer surveys sometimes identify changes in economic conditions before slower-moving government statistics capture them.
A person who notices fewer job listings, fewer recruiter calls or friends struggling to find work may become more cautious long before they personally lose a job.
America’s Economy Has an Unusual Problem
Normally, consumer pessimism of this magnitude would accompany a recession.
But today’s economy presents a more complicated picture.
The U.S. continues growing.
Layoffs remain limited.
Equity markets have been supported by booming artificial-intelligence investment.
But ordinary households face a different reality.
They are dealing with:
higher gasoline and diesel prices,
expensive groceries,
mortgage rates around or above 7%,
slowing wage gains,
fewer job opportunities,
and uncertainty surrounding geopolitical and trade policy.
Reuters quoted economist Kyle Moore of The Century Foundation describing the economy as effectively stagnant for the typical American household because businesses and consumers have difficulty planning amid policy uncertainty.
That gap between headline economic growth and household experience helps explain why confidence has deteriorated so sharply.
Mortgage Rates Are Adding Another Squeeze
Housing has become another major source of frustration.
The average U.S. 30-year fixed mortgage rate reached around 7.03% in late September, its highest level since January 2025, according to Freddie Mac data cited by Reuters.
Mortgage rates had risen more than one percentage point since the Middle East conflict escalated in February.
At the same time, U.S. home prices continued increasing.
Federal Housing Finance Agency data showed single-family house prices rising 0.3% in July and 2.6% from a year earlier.
That creates an especially difficult combination for first-time buyers.
Homes are expensive.
Borrowing is expensive.
And consumers are less certain about their future employment.
For many younger households, that means postponing homeownership entirely.
Consumer Spending Has Remained Strong — So Far
There is one reason economists are not yet declaring a recession.
Americans continue spending.
The Washington Post noted that household spending has remained relatively resilient despite historically weak confidence.
That divergence has become one of the defining features of the post-pandemic economy.
Consumers frequently tell surveys they feel terrible about economic conditions.
Then they continue buying goods, traveling, eating at restaurants and spending on entertainment.
But there are limits to how long that gap can continue.
Savings rates have declined.
Credit-card borrowing remains important for many households.
And if labor-market weakness translates into broader job losses, spending could slow quickly.
That is why economists are watching confidence more closely now than when unemployment was falling and wages were rising strongly.
The Holiday Shopping Season Could Become the Test
September’s confidence drop arrives just before one of the most important periods of the year for American retailers.
The November-December holiday season can determine profitability for many consumer businesses.
If households remain worried about prices and employment, they may:
buy fewer gifts,
trade down to cheaper products,
use discounts more aggressively,
reduce travel,
or finance more purchases with credit.
Retailers could therefore face an unusual holiday environment.
Affluent households benefiting from high financial-asset values may continue spending heavily.
Lower- and middle-income households may become much more cautious.
That could deepen an already visible split in consumer spending.
The Fed Faces a Dangerous Combination
The consumer survey also creates another headache for the Federal Reserve.
Normally, weak confidence and slowing employment would argue for lower interest rates.
But inflation remains elevated.
The Fed had just raised its benchmark interest rate by 25 basis points to a 3.75%-4.00% range when the September confidence survey was conducted.
At the time of the Reuters report, financial markets were assigning roughly a 68% probability of another October rate increase.
The problem is increasingly clear.
Higher rates can help fight inflation.
But they can also make mortgages, car loans, business borrowing and credit-card debt more expensive.
If the labor market continues weakening, additional tightening could deepen the slowdown.
That puts the Fed in an uncomfortable position:
inflation is telling policymakers not to ease too quickly, while consumers and the job market are warning them not to tighten too much.
The Midterm Elections Make the Numbers Political
The confidence collapse is also arriving just weeks before the November 3 U.S. midterm elections.
Economic perceptions are likely to play a major role in determining voter behavior.
Reuters reported that the deterioration in confidence cut across partisan groups, making it harder to dismiss the weakness as purely political sentiment.
For the Trump administration, this creates a potentially difficult contrast.
Financial markets and AI investment may suggest parts of the economy are performing well.
But many households judge economic performance based on simpler questions:
How much does gasoline cost?
How expensive are groceries?
Can I buy a house?
Can I find a better job?
Do I feel financially better than last year?
September’s survey suggests an increasing number of Americans dislike the answers.
Confidence Is Now Worse Than During the Pandemic
Perhaps the most striking comparison is historical.
The September reading of 81.9 was lower than the Conference Board’s weakest point during the Covid-19 pandemic.
That does not mean the economy is objectively worse than it was during lockdowns, when millions of Americans suddenly lost jobs.
It shows something different.
Consumers can feel deeply pessimistic even when unemployment remains comparatively low if they believe:
their purchasing power is deteriorating,
essential expenses keep increasing,
housing is inaccessible,
and future job opportunities are disappearing.
Confidence measures perception.
And perceptions eventually influence real economic behavior.
The Bigger Risk Is What Happens If Americans Stop Spending
For now, the American consumer has remained remarkably resilient.
That resilience has helped keep the world’s largest economy growing despite high interest rates, wars, trade uncertainty and persistent inflation.
But September’s confidence report shows that resilience is being tested.
The index is at a 12½-year low.
Future expectations are deteriorating.
Consumers see fewer jobs available.
Inflation expectations are rising.
Mortgage costs remain elevated.
And the subsequent September jobs report confirmed that hiring is slowing sharply.
None of those developments individually guarantees a recession.
Together, however, they create a growing vulnerability.
The most important question may no longer be whether Americans feel pessimistic.
It is whether they eventually start behaving that way.
Because if households finally respond to their worsening confidence by sharply reducing spending, the consumer that has kept the U.S. economy moving could become the very reason it slows.
