Consumer sentiment worsens as some economists warn of 'stagflation'

Source: ABC News

September 12, 2025, 10:35 AM


Consumer sentiment dampened in September, extending a decline from the previous month as government data showed a hiring slowdown alongside an uptick of inflation, prompting concern about an economic double-whammy called "stagflation." The reading came in lower than economists expected.

The two-month downturn in shopper attitudes resumes a decline that took hold after Trump took office, University of Michigan Survey data on Friday showed. At its low point, consumer sentiment fell close to its worst level since a bout of inflation three years ago. The measure remains below where it stood in December, before Trump took office.

Year-ahead inflation expectations held steady from August at 4.8%, the data showed. The outcome anticipated by respondents would put inflation well above its current level of 2.9%. Long-run inflation expectations ticked up for the second consecutive month, data showed.

The report arrived a day after an inflation reading showed an uptick in price increases in August as President Donald Trump's tariff policy intensified. Inflation stands at its highest level since January, though it remains less than a percentage point higher than the Federal Reserve's target rate of 2%.

Read more: https://abcnews.go.com/Business/consumer-sentiment-worsens-economists-warn-stagflation/story?id=125509868