University of Michigan's September Consumer Survey Preliminary Value Shows Significant Decline in Outlook Expectations
The preliminary value of the University of Michigan's September Consumer Survey shows a significant decline in outlook expectations, with the overall confidence index reported at 47.8, the second lowest on record.
The index decreased by 7.5% from August's 51.7 and is down 13.2% year-on-year. The expectations component fell to 45.8, a monthly drop of about 11.1%; the current conditions component only decreased to 50.9. Survey director Joanne Hsu stated that the one-year expectations for personal finances and business conditions have both declined, with rising fuel prices and trade tensions leading consumers to expect increased financial pressure. The one-year inflation expectation rose to 4.6%, the highest since June; the long-term inflation expectation increased to 3.4%. The series recorded its historical low in May. Data goes back to 1952. The market estimate was about 51.4, significantly lower than the actual result.
On the same day, the national average price of diesel in the U.S. reached approximately $6.06 per gallon. Hsu linked the deteriorating outlook to energy prices and trade friction. The index is down about 16% from February, before the outbreak of the Iran conflict. Respondents from both the Democratic and Republican parties showed significant weakening, while independent voters showed little change.
The current conditions index is much better than the outlook, indicating that the pressure comes from expectations of future oil prices and trade costs, rather than an immediate collapse in employment or retail. The one-year inflation expectation of 4.6% raises the household price anchor that the Federal Reserve is concerned about, moving it away from the common range of 2.8% to 3.2% for 2024.
Mechanically, this is an upward adjustment of the consumption discount rate. Buyers are postponing durable goods and discretionary spending; sellers are retailers facing re-priced energy and import costs. Beneficiaries are short-term inflation-protected assets and essential goods channels; those under pressure are discretionary consumption and automotive appliances that rely on optimistic outlooks. Funds are being pulled back from spending plans based on "next year will be better" to cash and bond market hedging.
Supplementary structure: The May low has proven that this series can fall below the memories of the early 1980s; September marks the second consecutive month of decline, still not returning to that bottom.
Source: Public Information
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The Michigan index portrays households as discount machines. Current conditions have only slightly declined, while expectations have plummeted, indicating that households believe today is manageable, but tomorrow's fuel and tariffs will be more expensive. Diesel surpassing $6 provides a tangible factor; trade friction offers an intangible price increase expectation. The one-year inflation expectation of 4.6% sends a message to the central bank: the anchor is loosening.
The capital path enters the shopping basket through oil prices. The rise in energy first impacts transportation and food, then affects the survey question of whether to change cars next year. Stocks may generate high revenue, but the survey still reaches a near-record low—there is an overlap between households holding stocks and the survey sample that does not eliminate the price of fuel. May had already recorded a historical low, and September proves that it was not just a one-month noise.
This is analogous to the survey collapse during the oil price shock from 1979 to 1980, and the inflation peak in 2022: households use fuel as an inflation teaching tool and trade news as a prelude to price increases. The industry phase is that supply shocks enter expectations, rather than demand collapsing first. The pricing power of discretionary consumption shifts to "can we wait another quarter?"
The structural judgment indicates a shift in pricing power from income expectations to cost expectations. The mechanism is: the wage story continues, while oil prices and tariffs rewrite the forward-looking real purchasing power. The survey does not determine interest rates, but provides evidence that households are already self-raising rates.
ABAB News · Law of Cognition
When current conditions can hold, expectations can collapse first.
The fuel pump is the household's inflation textbook.
New highs in the stock market do not fill the oil price gaps in the survey.