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The Conference Board 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 inflation expectations rose 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 consumer expectations and was broad-based across age groups and nearly all income groups, a signal that households are growing more pessimistic about both the current economy and the months ahead.
The survey, conducted between September 1 and 23, captured consumer sentiment during a period that included a federal funds rate hike and ongoing geopolitical tensions, according to the report published by Hardware Retailing. Both of the index’s main components deteriorated. The Present Situation Index, which reflects 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 market conditions, declined 5.9 points to 63.6 — its third consecutive monthly decline.
Underlying measures showed the breadth of the deterioration. Net views of current business conditions — the share of consumers rating conditions “good” minus those rating them “bad” — fell 3.4 percentage points to -1.9%, turning negative for the first time since September 2024. The drop was largely driven by more consumers describing business conditions as “bad.” The labor market differential, which subtracts the share saying jobs are “hard to get” from the share saying jobs are “plentiful,” retreated 2.5 percentage points to +1.7%.
Forward-looking measures weakened across all three components of the Expectations Index. 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 slipped 3.0 percentage points but stayed positive at +2.5%. Consumers’ 12-month inflation expectations rose 0.3 percentage points to 6.1% on an average basis and 5.1% on a median basis, while the share anticipating higher interest rates over the next year jumped 5.2 percentage points to 68.4%.
What the Confidence Drop Signals for Spending
Consumer confidence is closely watched because household spending accounts for the majority of U.S. economic activity, and sustained declines in sentiment can foreshadow weaker retail sales in the months ahead. The fact that the Expectations Index has now fallen for three consecutive months — and slipped further into negative territory — suggests households are increasingly bracing for weaker business conditions and a softer labor market over the next six months.
The details of the report point to specific pressure points. Inflation expectations rising to 6.1% on an average basis, combined with nearly seven in ten consumers expecting higher interest rates, indicates that households anticipate tighter budgets and costlier credit ahead. Confidence declined across all age groups on a six-month moving average basis, with the steepest drop reported among households earning $125,000 to $149,000 — a segment that typically carries significant discretionary spending power. For retailers and hardware stores in particular, weaker sentiment among higher-income households can weigh on big-ticket home improvement purchases.
Two Months of Softening Before September
September’s decline did not come out of nowhere. According to The Conference Board, the index had already been softening for two prior months before the September drop, which chief economist Dana M. Peterson described as a notable deterioration rather than an isolated reading. Consumer appraisals of current business conditions turning negative is the first such reading since September 2024, roughly two years earlier.
The report also arrives against a backdrop of tightening monetary policy. The survey window included a federal funds rate hike, an event that typically influences consumer views on borrowing costs, mortgage rates and credit card interest. The rate expectation data in the report — with 68.4% of consumers anticipating higher rates over the next 12 months — reflects that environment. The confidence reading contrasts with other recent retail data: separate reporting noted that retail sales rose for an 11th consecutive month in August, suggesting that actual spending had not yet matched the deterioration in sentiment through late summer.
What the September Reading Doesn’t Tell Us
Several questions remain open. The Conference Board described the September results as preliminary, and the figures could be revised. It is not yet clear how much of the decline reflects direct reactions to the rate hike and geopolitical tensions during the survey window, versus a broader shift in household sentiment that would persist even if those pressures ease.
It also remains uncertain whether weaker confidence will translate into weaker spending. Retail sales rose for an 11th consecutive month through August, and consumers in the September survey still expected household incomes to rise, albeit less than before. The divergence between softening sentiment and continued spending growth has not yet resolved. In addition, the report does not establish why the $125,000-$149,000 income bracket showed the greatest six-month decline in confidence; the underlying causes were not detailed.
Watch for October Data and Spending Trends
The Conference Board will publish final September figures and October’s reading in the weeks ahead, which will show whether the decline deepens or stabilizes now that the survey window containing the rate hike has passed. Economists and retailers will be watching whether the 11-month streak of retail sales growth continues into September and October, or whether the deterioration in expectations begins to show up in actual purchases.
Key indicators to monitor include the labor market differential, which at +1.7% remains barely positive and could signal broader weakness if it turns negative; 12-month inflation expectations, which rose to 6.1% on an average basis; and the share of consumers expecting higher interest rates, now at 68.4%. Upcoming Federal Reserve decisions on the federal funds rate will also shape the borrowing-cost outlook that consumers flagged as a growing concern.
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, from 88.6 in August. The Present Situation Index dropped 7.9 points to 109.3, and the Expectations Index declined 5.9 points to 63.6.
Why did confidence decline?
The survey period of September 1-23 included a federal funds rate hike and ongoing geopolitical tensions, according to the report. Consumers also grew more pessimistic about business conditions and the labor market, and inflation expectations rose to 6.1% on an average 12-month basis. The Conference Board did not attribute the decline to a single cause.
Is this the first decline in recent months?
No. The Expectations Index recorded its third consecutive monthly decline in September, and chief economist Dana M. Peterson said the index had been softening for two months before that. Consumer appraisals of current business conditions turned negative for the first time since September 2024.
Does lower confidence mean spending will fall?
Not necessarily, and that remains unclear. Separate data showed retail sales rose for an 11th consecutive month in August, even as sentiment weakened. Consumers in the September survey still expected their household incomes to rise, though less than in previous months.
Which income groups lost the most confidence?
On a six-month moving average basis, confidence declined across all age groups and nearly all income groups. Households earning $125,000 to $149,000 reported the greatest decline over the last six months, though higher-income groups remained generally more optimistic than lower-income ones.
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