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The Conference Board Consumer Confidence Index fell 6.7 points to 81.9 in September, its third straight monthly decline, with both current conditions and short-term expectations weakening. Inflation expectations rose and 68.4% of consumers expect higher interest rates in the year ahead.
The Conference Board Consumer Confidence Index fell by 6.7 points to 81.9 in September, down from 88.6 in August, extending a slide in household sentiment that has now lasted three consecutive months. The decline, reported September 29, 2026, was broad-based: consumers rated current business and labor market conditions worse and grew more pessimistic about the next six months, while inflation expectations ticked up. The survey period of September 1-23 included a federal funds rate hike and ongoing geopolitical tensions, the Conference Board noted.
The drop was driven by a sharp fall in the Present Situation Index, which measures consumers’ assessment of current business and labor market conditions. It declined by 7.9 points to 109.3. The Expectations Index, which gauges the short-term outlook for income, business and labor market conditions, fell by 5.9 points to 63.6, its third consecutive monthly decline.
Net views of current business conditions — the share of consumers calling conditions “good” minus those calling them “bad” — declined by 3.4 percentage points to -1.9%, a reading the Conference Board said turned negative for the first time since September 2024. The labor market differential, which compares the share saying jobs are “plentiful” with the share saying jobs are “hard to get,” retreated by 2.5 percentage points to +1.7%, meaning perceptions of employment softened but stayed in positive territory.
Expectations weakened across all three of the Expectations Index components. Net expectations for future business conditions dipped 3.2 percentage points to -9.5%, net expectations for the labor market declined 3.1 percentage points to -14.4%, and net expectations for household income fell 3.0 percentage points to +2.5%, remaining positive but lower than in prior months. On a six-month moving average basis, confidence trended downward across all age groups and nearly all income groups, with households earning $125,000-$149,000 reporting the greatest decline.
What the Confidence Drop Signals for Spending
Consumer confidence is watched closely as a leading indicator of household spending, which anchors most of U.S. economic activity. A reading of 81.9, combined with an Expectations Index at 63.6, points to households growing more cautious about both current conditions and the months ahead — a shift that can affect retailers’ sales forecasts, inventory decisions and hiring plans.
The report carries particular weight for sectors tied to discretionary and home-improvement spending. Weak confidence often precedes pullbacks in larger, deferrable purchases, and retailers heading into the fourth-quarter holiday period will be watching whether the pessimism recorded in September translates into softer sales. The rise in inflation expectations — average 12-month expectations climbed 0.3 percentage points to 6.1% — alongside 68.4% of consumers anticipating higher interest rates adds pressure on household budgets and financing-sensitive purchases.
The Conference Board noted that consumers still largely expected stock prices to rise over the next 12 months, though that optimism moderated in September — a signal that wealth effects from markets, while intact, may be providing less support than earlier in the year.
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A Third Straight Month of Softening
September’s decline follows two prior months of weakening confidence, according to the Conference Board, meaning the drop is part of a sustained downtrend rather than a one-month outlier. The deterioration in current business conditions to negative territory marks a shift from the more mixed readings of the past year.
The September survey window of September 1-23 overlapped with a federal funds rate hike by the Federal Reserve and continued geopolitical tensions, both of which the Conference Board cited as backdrop factors during the survey period. The report also arrives against a retail backdrop of continued growth: separately reported data showed U.S. retail sales rose modestly in August, an 11th consecutive monthly gain, according to figures cited by Hardware Retailing. That contrast — spending still rising while sentiment falls — leaves open the question of how long consumption can hold up if confidence keeps eroding.
Open Questions on Sentiment and Spending
The figures released are preliminary results, and the Conference Board may revise them when final September data is published. It is not yet clear whether the September decline reflects a lasting shift in household sentiment or a sharper reaction to events within the survey window, including the rate hike and geopolitical headlines.
The report also does not establish how confidence will translate into actual spending. Retail sales have risen for 11 straight months even as confidence has softened for three, and it remains uncertain whether consumers will cut back in the months ahead or continue spending despite their pessimism. The Conference Board’s analysis does not isolate how much of the decline was attributable to any specific event.
Watching October Data and Holiday Spending
Economists and retailers will look to the October Consumer Confidence report to see whether the downtrend extends into a fourth month or stabilizes, along with final September figures that may revise the preliminary readings. Upcoming retail sales data will test whether the weakening sentiment is showing up in actual purchases, particularly for discretionary categories.
Attention will also focus on Federal Reserve policy following September’s rate hike, given that 68.4% of consumers expect borrowing costs to rise further over the next 12 months. The holiday shopping season, a make-or-break period for retailers, will provide the clearest test of whether households’ gloomier outlook curbs their spending.
Key Questions
How much did consumer confidence fall in September?
The Conference Board Consumer Confidence Index fell by 6.7 points to 81.9 in September, down from 88.6 in August. It was the third consecutive monthly decline.
What is the difference between the Present Situation Index and the Expectations Index?
The Present Situation Index reflects consumers’ assessment of current business and labor market conditions, while the Expectations Index captures their short-term outlook for income, business and labor market conditions. Both fell in September — the Present Situation Index by 7.9 points to 109.3 and the Expectations Index by 5.9 points to 63.6.
Why did confidence decline in September?
The Conference Board did not attribute the decline to a single cause. The survey period of September 1-23 included a federal funds rate hike and ongoing geopolitical tensions, and consumers’ assessments of current business conditions, the labor market and the six-month outlook all worsened.
What do consumers expect for inflation and interest rates?
Average 12-month inflation expectations rose 0.3 percentage points to 6.1% (median: 5.1%), and the share of consumers expecting higher interest rates over the next 12 months jumped 5.2 percentage points to 68.4%.
Does lower confidence mean consumer spending will fall?
Not necessarily. Confidence is a leading indicator that economists watch for signs of future spending behavior, but retail sales have risen for 11 consecutive months even as confidence has weakened for three. Whether spending holds up amid the current pessimism remains unclear.
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