U.S. consumer sentiment declined again this month by slightly more than expected, with September's final reading coming in at 55.1 (revised from 55.4) vs. 58.2 in August and 61.7 in July. This compares to the consensus of 55.4 in the Econoday survey of forecasters.

The pessimism is no longer due to just concerns about the broader economic outlook but also rising worries about personal financial situations.

"Although September's decline was relatively modest, it was still seen across a broad swath of the population, across groups by age, income, and education, and all five index components, the report said.

Nationally, not only did macroeconomic expectations fall, particularly for labor markets and business conditions, but personal expectations did as well, with a softening outlook for their own incomes and personal finances.

The report noted continued frustration over persistent high prices and their negative impact on consumers' personal finances. Interviews this month highlight the fact that consumers feel pressure both from the prospect of higher inflation as well as the risk of weaker labor markets, it said.

The final year-ahead inflation expectations dipped to 4.7 percent in September, from 4.8 percent in August.

Long-run inflation expectations in September also rose to 3.7 percent from 3.5 percent last month, the second consecutive monthly increase.

Forecasters see no revision from the preliminary readings with the sentiment index unchanged at 55.4 and inflation expectations unrevised at 4.8 percent.

The University of Michigan's Consumer Survey Center questions households each month on their assessment of current conditions and expectations of future conditions. Preliminary estimates for a month are released at mid-month and are based on about 420 respondents. Final estimates are released near the end of the month and are based on about 600 respondents.

The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer sentiment index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.

Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.