US Consumer Sentiment Close to Record Low

The University of Michigan’s consumer sentiment index was revised higher to 48.0 in late October 2026, up from a preliminary estimate of 46.3, but remained at its lowest level in five months. Gains in sentiment among Republicans and Democrats were offset by declines among independents. Year-ahead business conditions improved by around 14%, although the index remained 16% below its level in October 2025. Meanwhile, the decline in the Current Conditions subindex was driven entirely by buying conditions for durable goods, which plunged 18% amid higher interest rates and growing concerns about affordability. Purchasing power continues to dominate consumer views of the economy, with sentiment now 10% below its year-ago level and 15% below February, just before the Iran conflict. Year-ahead inflation expectations edged up to 4.7% from 4.6% in September, while long-run inflation expectations also increased, rising to 3.5% from 3.4%.

The University of Michigan’s consumer sentiment index fell to 46.3 in early October 2026, according to the preliminary estimate, its lowest level since May’s record low and well below market expectations of 47.6. The current economic conditions subindex plunged to an all-time low of 44.7, as buying conditions for durable goods deteriorated sharply amid persistently high prices and borrowing costs. Lower-income consumers and households with smaller stock portfolios recorded particularly steep declines, reflecting their limited capacity to absorb further price increases. Frustration over the cost of living continues to mount, with consumers across the political spectrum increasingly perceiving a deterioration in the economic outlook since the beginning of the year. Meanwhile, inflation expectations edged higher, with year-ahead expectations rising to 4.7% from 4.6% in September, while long-run inflation expectations increased to 3.5% from 3.4%.

The University of Michigan’s consumer sentiment index improved slightly to 48.1 in September 2026 from a preliminary reading of 47.8, but remained near historically weak levels. Views of current and year-ahead personal finances both deteriorated by around 10% this month, while concerns over high prices continued to intensify. Buying conditions for durable goods improved modestly, partly reflecting the view that making purchases now could help consumers avoid higher prices later. Meanwhile, the short-term outlook for business conditions deteriorated sharply amid renewed concerns that elevated fuel prices and escalating trade disputes could weigh on the broader economy. Sentiment weakened across the political spectrum, with Republicans’ confidence down 20% from January and Democrats’ down 13%. Year-ahead inflation expectations rose to 4.6%, the highest since June, while five-year expectations edged up to 3.4% after holding at 3.3% for three consecutive months.