US consumer sentiment slipped to its second-lowest reading on record in October 2026, as households remained concerned about purchasing power and expected inflation to rise. The University of Michigan’s final Consumer Sentiment Index fell to 48.0 from 48.1 in September, leaving confidence deeply depressed ahead of the November 3 congressional elections.
Key Takeaways
- October’s final sentiment reading improved on the preliminary estimate but remained near the record low.
- Independent voters drove the monthly decline, while sentiment among Democrats and Republicans improved.
- Short- and longer-term inflation expectations rose, complicating the backdrop for the Federal Reserve’s next meeting.
Table of Contents
- US consumer sentiment remains weak despite upward revision
- Inflation expectations rise across both time horizons
- Resilient spending complicates the policy backdrop
- Conclusion
US consumer sentiment remains weak despite upward revision
The final October index was above the preliminary reading of 46.3, which was also the level economists had expected. That upward revision did not change the broader picture: sentiment remained 10% below its level a year earlier and 15% below February, before the Iran conflict began.
Joanne Hsu, director of the Surveys of Consumers, said purchasing power continued to dominate households’ assessments of the economy. Rising prices associated with the Middle East conflict have intensified affordability concerns.
The monthly deterioration was concentrated among respondents identifying as political independents, an important group of swing voters. Their sentiment weakened even as readings among Democrats and Republicans improved, putting household finances in focus ahead of the election that will determine control of Congress.
| Item | Details |
|---|---|
| One-year inflation expectations | 4.7% in October, up from 4.6% in September |
| Five-year inflation expectations | 3.5% in October, up from 3.4% in September |
| Independent respondents’ sentiment | 42.4 in October, down from 47.7 in September |
| Record-low overall sentiment | 44.8 in May 2026 |
Inflation expectations rise across both time horizons
Consumers raised their inflation expectations for both the next year and the next five years. The one-year measure has climbed from 3.4% in February, while the five-year measure has risen from 3.2% in March.
Hsu said increases in inflation expectations were not confined to one part of the political spectrum. Since January, the number of respondents citing inflation as a strain on their finances rose by 27% among independents, 52% among Republicans and 15% among Democrats.
The Federal Reserve’s explanation of its longer-run inflation goal identifies 2% inflation, measured by the annual change in the personal consumption expenditures price index, as consistent with its employment and price-stability mandate. The survey readings measure consumers’ expectations rather than actual inflation on that official gauge.
Resilient spending complicates the policy backdrop
Weak confidence has not been matched by an equivalent collapse in spending. Hsu cautioned that relatively resilient consumption could make disinflation harder if some households are buying now to avoid expected future price increases. That is a possible explanation, not a confirmed measure of consumer behavior.
Federal Reserve officials are due to meet in Washington in the week following the survey release. They are broadly expected to leave the policy rate at 3.75%–4.00%, following a quarter-percentage-point increase in September.
Most officials have indicated that they see a need for higher rates, although key policymakers have also expressed a willingness to wait for more data. The October survey adds evidence of persistent inflation concerns without establishing what the Fed will decide.
Conclusion
US consumer sentiment ended October near its historical low despite an upward revision from the preliminary estimate. The next scheduled policy event is the Federal Reserve meeting in the following week, followed by the November 3 midterm elections.
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