Consumer confidence remains fragile, latest University of Michigan index shows
Consumer Sentiment Dips to Five-Month Low Amid Economic Concerns
Consumer sentiment in the United States took a hit in October, reaching a five-month low as worries about a stagnant job market and persistent inflation weigh on the minds of Americans, according to new data from the University of Michigan.
The preliminary October sentiment index, released on Friday, showed a 0.1% decrease from September, dropping from 55.1 points to 55. While the decline may seem marginal, it marks the third consecutive month of decreasing confidence, a significant trend closely monitored by investors.
“The net percentage of households anticipating an increase in the unemployment rate over the next year decreased to 48% in October, down from 53% in September. However, this still paints a grim picture compared to earlier in the year and historically suggests a potential surge in joblessness in the coming months,” noted Oliver Allen, senior U.S. economist at Pantheon Macroeconomics.
Concerns over high prices persist, with expectations for inflation remaining elevated in the minds of consumers. Additionally, worries about dwindling job prospects continue to be a top concern for Americans, as highlighted by Joanne Hsu, director of the Surveys of Consumers at the University of Michigan.
“At this juncture, consumers are not optimistic about significant improvements in these key factors,” Hsu remarked.
Despite the ongoing U.S. government shutdown, which commenced on October 1, it appears that consumers’ economic outlook has not been significantly impacted so far, according to survey responses collected between September 22 and October 6.
The latest University of Michigan report offers valuable insights into the economy at a time when other essential data points are unavailable due to the shutdown, including the delayed release of the September jobs report by the Department of Labor.
While the sentiment index remained relatively stable compared to September, recent data suggests ongoing worries about the economy. A CBS News poll revealed that the percentage of individuals believing the economy is deteriorating rose to 59% in October from 54% in July.
Despite these concerns, there are indications that the economy is resilient. A report from Bank of America indicated a 2% increase in credit and debit card spending per household in September compared to the previous year, signaling a positive trend in consumer spending.
Alexandra Brown, North America economist at Capital Economics, predicts that consumer spending growth will likely remain robust in the final quarter of 2025.
