U.S. Consumer Confidence Down in October on Inflation Concerns

In the University of Michigan’s U.S. consumer sentiment survey, consumer sentiment declined in October compared with an initial estimate published earlier this month, amid a weakening labor market and stubborn inflation.

The University reported that the index ended October at 53.6, dropping from 55.0 earlier in the month and 55.1 last month. Sentiment has fallen 24 percent since reaching 70.5 in October 2024.

Though consumer sentiment improved since April’s three-year low, it remains weak, reflecting ongoing concerns about U.S. economic vulnerabilities.

The Current Economic Conditions Index decreased 3 percent from September and 9.7 percent annually, to 58.6 points. The Index of Consumer Expectations decreased by 2.7 percent monthly to 50.3, and tumbled 32.1 percent on a yearly basis.

The University of Michigan’s Surveys of Consumers Director Joanne Hsu stated, “Consumer sentiment was little changed this month, slipping a scant 1.5 index points from September. A modest increase in sentiment among younger consumers was offset by decreases among middle-aged and older consumers. Current personal finances inched up, while expected personal finances receded. Overall, consumers perceive few material changes in economic circumstances from last month; inflation and high prices remain at the forefront of consumers’ minds. There was little evidence this month that consumers connect the federal government shutdown to the economy. Only about 2 percent spontaneously referenced the shutdown during this month’s interviews, compared with the 10 percent of consumers who did so in January 2019 during that 35-day shutdown.

“Year-ahead inflation expectations ebbed from 4.7 percent last month to 4.6 percent this month. These expectations are currently midway between the readings seen a year ago and the highs seen this year in May in the wake of the initial announcements of major tariff changes. Long-run inflation expectations increased from 3.7 percent last month to 3.9 percent this month but remain below this year’s high point seen in April. This month’s increase in long-run inflation expectations was driven primarily by independents and Republicans. Inflation uncertainty—as measured by the interquartile range of expectations—ticked up for both time horizons this month.”