The University of Michigan’s Consumer Sentiment Index slipped to 48.0 from 48.1 in September, marking the second-lowest reading since the survey’s inception.
The decline comes as gasoline prices have surged 15% over the past month, a spike tied to the ongoing Middle East conflict. Joanne Hsu, director of the Surveys of Consumers, said, “Purchasing power continues to dominate consumer views of the economy.”
Independent voters, a key swing demographic, saw their sentiment drop to 42.4 in October from 47.7 in September, while Republicans and Democrats showed modest gains. With millions already casting early ballots, the sentiment shift could tilt the balance in the House of Representatives.
Inflation expectations for the next 12 months rose to 4.7% from 4.6% in September, reflecting heightened concerns about sustained price hikes. Hsu warned that persistently elevated inflation expectations pose a risk to the Federal Reserve’s 2% target.
Federal Reserve officials are slated to meet in Washington next week; market consensus is to hold the policy rate at 3.75%–4.00% despite recent inflation data.
Across the country, a 35‑year‑old nurse in Chicago says she has cut discretionary spending to cope with rising costs, illustrating the personal toll of the index’s downward trend.