| Consensus | Consensus Range | Actual | Previous | |
| Index | 46.3 | 45.7 to 47.3 | 48.0 | 46.3 |
| Year-ahead Inflation Expectations | 4.7% | 4.7% | ||
| Index Change | 1.7 | -1.8 | ||
| Index % Change | 3.7% | -3.7% |
Highlights
U.S. consumer sentiment fell again this month, but not as much as expected, with October’s final reading coming in at 48.0 vs. 48.1 in September and 51.7 in August. This beats the consensus for 46.3 in the Econoday survey of forecasters. Consumer sentiment dipped 0.2 percent, held down by long-standing inflation worries.
Sentiment is down 10.4 percent from October 2025, with year-ahead expectations for business conditions down significantly (-16.0 percent) compared to the same month a year ago.
“Purchasing power continues to dominate consumer views of the economy,” the report said.
“This month’s decline in the Current Conditions sub-index was driven entirely by buying conditions for durables, which plunged 18% on the basis of higher interest rates and rising concerns about the affordability of such purchases,” it noted.
Final year-ahead inflation expectations jumped to 4.7 percent in October from 4.6 percent in September. This significantly exceeds the 3.4 percent reading seen in February before the Iran conflict began, along with all 2024 readings, the report said.
Long-run inflation expectations in October rose to 3.5 percent from 3.4 percent last month, remaining above the 2.8 percent to 3.2 percent range seen in 2024.
Market Consensus Before Announcement
No revision expected from the very bad 46.3 in the October preliminary, down 3.7 percent from September final and down 13.6 percent from a year ago.
Definition
The University of Michigan's Consumer Survey Center questions households each month on their assessment of current conditions and expectations of future conditions. Preliminary estimates for a month are released at mid-month and are based on about 420 respondents. Final estimates are released near the end of the month and are based on about 600 respondents.
Description
The pattern in consumer attitudes and spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.
This balance was achieved through much of the nineties and, in large part because of this, investors in the stock and bond markets enjoyed huge gains. It was during the late nineties that the consumer sentiment index hit its historic peak, reaching levels that were never matched during the subsequent 2001 to 2007 expansion nor during the long expansion following the Great Recession.
Consumer spending accounts for more than two-thirds of the economy, so the markets are always dying to know what consumers are up to and how they might behave in the near future. The more confident consumers are about the economy and their own personal finances, the more likely they are to spend. With this in mind, it's easy to see how this index of consumer attitudes gives insight to the direction of the economy. Just note that changes in consumer confidence and retail sales don't move in tandem month by month.
