The University of Michigan's early October read on consumer sentiment landed at 46.3, missing the Bloomberg-surveyed median of 47.6 and marking the softest print since May. Under the hood, the view of current economic conditions slid to 44.7 from 50.9, setting a new all-time low. By contrast, the outlook component edged up to 47.3 from 46.3, its first month-over-month increase since July.
Inflation expectations ticked higher. Consumers see prices rising 4.7% over the next year, a touch above 4.6% previously. Over the next five to ten years, they expect inflation to average 3.5% a year, slightly higher than in September.
Consumer sentiment leads spending, and spending leads the economy. Market Briefs reads these surveys free every morning.
Stubborn gasoline prices, higher borrowing costs, and slower hiring weighed on confidence. Elevated fuel costs are piling onto frustration with persistent inflation and a rising cost of living. Recent months have seen overall price gains outpace pay increases, adding pressure to household budgets.
A separate look at the hit from pricier gas showed that only about 31% plan to keep spending at typical levels over the coming year. A little more than half reported they will pare back purchases of household goods, cars, meals out, and travel. Even so, views of personal finances held steady this month.
Perceived buying conditions for durable goods, however, fell to a record low as people cited higher prices and interest rates. Responses were gathered between Sept. 22 and Oct. 5.
Joanne Hsu, the survey's director, noted a steep decline among lower-income households and people with more modest stock portfolios. Confidence improved among Democrats and Republicans, but a decline among independents offset those gains. Hsu added, "Despite their differences, consumers of all political identifications agree that the outlook for the economy has softened since the beginning of the year prior to the Iran conflict."
Here is the twist for your wallet: even with historically weak sentiment for much of the year, spending has held up, supported by a stable job market and a buoyant stock market. At the same time, consumers are reporting the toughest environment yet for big-ticket purchases because of prices and interest rates.
What households feel about prices shows up in sales data next. Get the free Market Briefs daily newsletter and follow it.
