U.S. consumer sentiment near record low as frustration over economy mounts
SPY•The University of Michigan’s Consumer Sentiment Index fell to 46.3 in October from 48.1 in September, nearing a record low. Fifty-four percent of consumers said they would cut back on pricier purchases.
1. Sentiment falls further
The University of Michigan’s Consumer Sentiment Index posted its third straight monthly decline, dropping to 46.3 from 48.1 in September; economists had forecast 47.8. The measure of current economic conditions fell to an all-time low of 44.7 from 50.9, while expectations improved modestly.
2. Spending outlook diverges
Lower-income consumers and those with smaller stock portfolios saw the sharpest deterioration in sentiment. A separate survey found just under a third of consumers expected to spend as usual over the coming year on items that had experienced large price increases, while 54% expected to cut back and about 16% to stop buying. Higher-income consumers were more likely to maintain spending.
3. Inflation expectations rise
Consumers’ one-year inflation expectations edged up to 4.7% from 4.6% in September, and their five-year expectations rose to 3.5% from 3.4%. The article said the US central bank raised its benchmark rate by 25 basis points last month to a range of 3.75% to 4.00%.
