US Consumer Sentiment Little Changed in October

The University of Michigan’s consumer sentiment index rose to 51.0 in early November 2026, up from 48.0 in October and comfortably above market expectations of 48.0. Modest gains across several components, including expectations for personal finances and business conditions, were driven primarily by independent voters. Sentiment improved among lower- and middle-wealth households but fell 5% among consumers with the largest stock portfolios, following a relatively turbulent period in equity markets. Consumer comments also revealed growing concerns about a potential AI bubble, although these remained secondary to persistent cost-of-living pressures. Despite November’s improvement, overall sentiment remains 10% below its February level. Inflation expectations offered a more encouraging signal: year-ahead expectations declined to 4.3% from 4.7% in October, while long-run expectations edged down to 3.4% from 3.5%.

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%.