Michigan survey shows US consumer sentiment near record lows despite upward revision

The University of Michigan reported on October 23 that its final October consumer sentiment index was 48, slightly below September's 48.1 and still near record lows. The survey measures households' views of their finances and the economy. The final reading exceeded both the preliminary reading of 46.3 and economists' forecast of 46.3.^[1][2]

Coverage attributed the weak mood to high prices and rising interest rates, with the Middle East conflict pushing up prices and weighing on households' economic views. Consumers' inflation expectations—the pace at which they expect prices to rise—also increased.^[1][3][2]

High prices squeeze the money households have left after essentials, while weak confidence in their finances can encourage them to postpone optional purchases. Retailers and sellers of durable goods therefore face a risk of weaker demand and more discounting; the survey alone does not establish that actual spending has fallen.^[1][3]

Rising inflation expectations also complicate the rate outlook: if subsequent price data confirm persistent inflation, there may be less room for rate cuts, prolonging pressure on purchases such as homes and cars that often require loans. On October 23, two-year and ten-year Treasury yields stood at 4.69% and 5.00%, respectively, each up 0.04 percentage point from the previous session. Those yields provide financing-cost context, without establishing that this survey caused the increase.^[2]

Impact

What to watch next

• The Conference Board's October consumer confidence release on October 27 will test whether another household survey also shows weak sentiment.
• The October 28 Fed rate decision and press conference will show how policymakers balance inflation pressure against demand risks, with implications for borrowing costs.
• September personal spending and PCE price data, due October 29, will test whether actual spending is slowing and price pressures are persisting.