US Consumer Confidence Hits 12-Year Low Amid Iran Conflict
American consumer confidence plummeted in September as soaring fuel prices and inflation strained household budgets ahead of the midterm elections.
U.S. consumer confidence dropped to its lowest level since April 2014 in September, with The Conference Board reporting an index fall to 81.9. Simultaneously, the University of Michigan's Consumer Sentiment Index fell to 48.1, its second-lowest reading since 1952. This collapse in optimism is driven by surging gasoline and diesel prices—linked to the ongoing war with Iran and the shutdown of the Strait of Hormuz—alongside persistent inflation and rising mortgage rates.
Donald Trump and his administration face significant political headwinds as the midterm elections approach. Sentiment among Republicans has dropped 20% since January, a sharper decline than the 13% drop seen among Democrats. While the White House cites record-low poverty and strong GDP growth, critics and polling suggest a majority of adults believe current policies are worsening the economy.
To combat stubborn inflation, which reached 3.4% annually in August, the Federal Reserve raised its benchmark interest rate to approximately 3.9% in mid-September. Despite a resilient labor market with low unemployment, real wages have stagnated, creating a K-shaped economy where high-income households drive spending while lower-income families struggle to afford basic necessities. In response to energy spikes, the U.S. Department of Energy offered to lend 40 million barrels from the Strategic Petroleum Reserve to energy companies.
