US Consumer Sentiment Collapses to Record Low

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.

The University of Michigan’s consumer sentiment index fell to 47.8 in early September 2026, down for a second consecutive month and well below market expectations of 51.0, according to the preliminary estimate. It was the weakest reading since May’s record low. Year-ahead expectations for personal finances and business conditions also deteriorated, as consumers anticipate greater pressure on household budgets amid rising fuel prices and trade tensions. Five-year business expectations were broadly stable but remained well below their historical average, suggesting consumers do not expect current risks to significantly worsen the longer-term outlook. Overall sentiment is now 16% below February levels, before the start of the Iran conflict, and 13% below a year ago. Year-ahead inflation expectations jumped 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.