Consumer Confidence Plunges to Multi-Month Lows as Recession Warnings Flash
September 2025 data reveals sharp decline in economic optimism as Americans grow increasingly worried about jobs, inflation, and personal finances
October 6, 2025 — American consumers are growing increasingly pessimistic about the economy, with two major confidence indices hitting their lowest levels in months and key recession warning signals now flashing red.
Confidence Metrics Hit the Skids
Consumer confidence took a significant hit in September 2025, with both major tracking surveys reporting steep declines:
- The Conference Board’s Consumer Confidence Index (CCI) fell to 94.2, down from 97.8 in August — the lowest reading since April 2025
- The University of Michigan’s Index of Consumer Sentiment dropped to 55.1 from 58.2 in August — the weakest showing since May 2025
The decline represents a troubling continuation of deteriorating consumer outlook that has persisted throughout 2025.
What’s Driving the Pessimism?
Several key factors are weighing on American consumers’ minds:
Labor Market Deterioration
The job market shows clear signs of cooling. For nine consecutive months, Americans’ assessment of job availability has worsened. Only 26.9% now describe jobs as “plentiful” — down from 30.2% in August and the lowest percentage since March 2021. This aligns with broader economic data showing fewer job openings and slower hiring across the economy.
Persistent Inflation Concerns
Inflation remains top-of-mind for consumers, with 44% of Michigan survey respondents citing it as a major issue. While year-ahead inflation expectations edged slightly lower to 4.7%, they remain elevated. Longer-term five-year expectations stand at 3.7%, well above the Federal Reserve’s 2% target.
Souring Business Outlook
Only 19.5% of respondents now rate current business conditions as “good,” down from 21.8% in August. The Conference Board’s Present Situation Index plummeted to 125.4 from 132.4 — representing the largest single-month drop in a year.
Personal Finance Worries
Americans are also growing more concerned about their personal financial situations, with outlooks softening across the board.
Recession Warning Bells
Perhaps most concerning is the Conference Board’s Expectations Index, which has remained below the critical 80 threshold for eight consecutive months since February 2025. Historical analysis shows that when this index stays below 80 for an extended period, it typically signals heightened recession risk within the next year.
The September reading of 73.4 continues this troubling trend, suggesting that consumers see little improvement on the horizon.
By the Numbers: September 2025 Consumer Confidence
| Indicator | September 2025 | August 2025 | Monthly Change |
|---|---|---|---|
| Conference Board CCI | 94.2 | 97.8 | -3.6 |
| Present Situation Index | 125.4 | 132.4 | -7.0 |
| Expectations Index | 73.4 | 74.7 | -1.3 |
| Michigan Consumer Sentiment | 55.1 | 58.2 | -5.3% |
| 1-Year Inflation Expectations | 4.7% | 4.8% | -0.1% |
| Jobs Rated “Plentiful” | 26.9% | 30.2% | -3.3% |
What This Means
The sharp decline in consumer confidence points to growing economic anxiety among Americans. With the labor market cooling, inflation concerns persisting, and recession warning indicators flashing, the economic outlook for late 2025 and early 2026 appears increasingly uncertain.
Consumer spending accounts for approximately 70% of U.S. economic activity, making consumer confidence a critical leading indicator. When Americans feel pessimistic about their finances and the economy, they typically pull back on spending, which can become a self-fulfilling prophecy that pushes the economy toward recession.
The question now is whether policymakers and business leaders can take action to reverse this troubling trend before consumer pessimism translates into a broader economic slowdown.