Consumer sentiment sours as expectations plunge to record lows
SPY•The University of Michigan’s preliminary October consumer sentiment index fell 1.8 points to 46.3, below the 47.8 consensus. Current conditions dropped 12.2% to a record-low 44.7, while near-term inflation expectations rose to 4.7%.
1. Sentiment falls further
The University of Michigan’s preliminary October consumer sentiment index declined 1.8 points, or 3.7%, to 46.3, slightly below the 47.8 consensus. The current conditions reading fell 12.2% to 44.7, its lowest in the survey’s history, while near-term expectations rose one point to 47.3.
2. Inflation concerns rise
Near-term inflation expectations increased to 4.7%, and longer-term price-growth expectations edged up to 3.5%. Joanne Hsu, director of consumer surveys at the University of Michigan, said lower-income consumers and those with smaller stock portfolios saw sentiment drop steeply, citing concerns about prices and a weakening economic trajectory.
3. Spending may differ
The overall sentiment index is down 19.4% over the past 12 months. The article notes that consumers have often increased personal consumption expenditures even when sentiment fell, while suggesting higher gasoline prices could help explain a more recent divergence.
