American consumer sentiment barely moved in October, holding near the lowest level in the 74-year history of the University of Michigan survey as worries over high prices and borrowing costs continued to weigh on households. The final Index of Consumer Sentiment came in at 48.0, just a tenth of a point below September’s 48.1.
The reading is the second-lowest final figure on record, behind only the all-time low of 44.8 set in May, according to Reuters and survey reports. It was better than the preliminary October reading of 46.3, which economists had expected to hold, but it still leaves sentiment 10% below a year ago and 15% below February, just before the Iran conflict began.
Buying conditions collapse
The survey’s Current Economic Conditions index fell to 46.7 from 50.9 in September, its second-lowest reading on record. Surveys of Consumers director Joanne Hsu said the drop was driven entirely by buying conditions for durable goods, which plunged 18%.
Year-ahead inflation expectations rose to 4.7% from 4.6%, while long-run expectations edged up to 3.5% from 3.4%. Nearly 70% of respondents expect interest rates to keep rising in 2027, the highest share in more than three years, according to survey analysis.
Independents drive the gloom
The weakness was led by respondents who identify as independents, whose sentiment score fell to 42.4 from 47.7 in September — barely above May’s record low of 40.6 — while scores for Democrats and Republicans both improved, Hsu said.
The survey ran from September 22 to October 19, before Brent crude climbed above $113 a barrel this week, so the latest fuel-price surge is not yet captured. With midterm elections days away and affordability the central issue, analysts said the mood of shoppers matters as much as their wallets for the holiday season ahead.
The gloom has not stopped holiday spending plans outright. The National Retail Federation’s October consumer survey found 91% of US adults still plan to celebrate major winter holidays, and 43% said they will target more sales this season. Analysts said that combination — low confidence but continued celebration — explains why retailers are leaning so heavily on discounts and promotions. Shoppers may spend, but they are likely to spend carefully, comparing prices and waiting for deals rather than buying on impulse.
