U.S. Consumer Sentiment Near Record Low Before Midterms — SkimNews
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- University of Michigan Consumer Sentiment Index dropped to 46.3 in October from 48.1 in September, the third straight monthly decline and approaching the record low plumbed in May, versus the 47.8 economists polled by Reuters had forecast.
- Current economic conditions slumped to an all-time low of 44.7 from 50.9 in September, with buying conditions for durable goods plunging on high prices and borrowing costs.
- Sentiment deteriorated sharply among lower-income consumers, those with smaller stock portfolios, and Independents, while Democrats and Republicans saw modest upticks but remained well below January 2025 levels.
- Inflation expectations for the next year rose to 4.7% from 4.6%, having surged from 3.4% in February before the U.S.-Israeli war with Iran began; five-year expectations climbed to 3.5% from 3.4%.
- The Federal Reserve raised its overnight benchmark rate by 25 basis points to the 3.75-to-4.00% range in September, its first hike in three years, with economists expecting another move in December.
- Consumer spending patterns show a K-shape: higher-income households keep buying on strong equity gains, while 54% of consumers plan to cut back on price-increased items and 16% plan to stop buying them entirely.
Why it matters: The K-shape economy insulates headline spending even as sentiment collapses to 46.3, but 54% of consumers plan to cut back on inflated items and 16% plan to stop entirely — a real political risk for Trump. Inflation expectations climbing from 3.4% to 4.7% since the U.S.-Israeli war with Iran began keeps further Fed hikes on the table, squeezing lower-income voters before the Nov. 3 midterms.
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