Consumer Sentiment Stays Near Record Low in October as Inflation Expectations Climb

U.S. consumer sentiment held near a record low in October, as high prices and rising inflation expectations continued to weigh on Americans' views of the economy less than two weeks before the Nov. 3 midterm elections, according to final survey results released Friday, Oct. 23, by the University of Michigan.

The university's Index of Consumer Sentiment came in at 48.0 for October, down from 48.1 in September and 53.6 in October 2025, according to the Surveys of Consumers. That is a 10.4% drop from a year earlier.

The final reading was higher than the preliminary October figure of 46.3, which economists polled by Reuters had also expected, Reuters reported. Even so, it was the second-lowest reading on record, behind the all-time low of 44.8 set in May, according to Reuters.

"Purchasing power continues to dominate consumer views of the economy," Joanne Hsu, director of the Surveys of Consumers, said in the university's release. "Sentiment is now 10% below a year ago and 15% less than February, just prior to the Iran conflict."

Inflation Expectations and Buying Conditions

Consumers expect prices to keep climbing. Year-ahead inflation expectations rose to 4.7% from 4.6% in September, well above the 3.4% recorded in February, according to the University of Michigan. Long-run inflation expectations rose to 3.5% from 3.4%, above their 2024 range of 2.8% to 3.2%. Both measures were at their highest since May, the survey said.

The survey's Current Economic Conditions index fell 8.3% for the month to 46.7, a decline Hsu said 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." The Index of Consumer Expectations rose 5.4% to 48.8.

The share of consumers who mentioned, without being asked, that high prices were hurting their personal finances rose for a fourth straight month to 56%, compared with 45% in January, Spectrum News reported. More than 40% of respondents brought up gas prices on their own, according to Spectrum News, which cited AAA's national average of $4.29 a gallon on Friday, up from $3.07 a year ago.

About 85% of consumers said it is a bad time to buy a house because of recent interest rate increases, and 69% expect interest rates to rise in the coming year, the highest share since April 2023, Spectrum News reported.

A Split by Party and by Stock Holdings

Sentiment rose among Republicans and Democrats this month but fell among independents, Hsu said. Independents' sentiment score dropped to 42.4 from 47.7 in September, just above May's record low of 40.6, Reuters reported.

Since January, the number of Republicans citing high prices as a drag on their finances has risen 52%, compared with 27% for independents and 15% for Democrats, according to Reuters. "These increases are seen across the political spectrum, with Republicans exhibiting the largest proportional rise," Hsu said, according to Spectrum News.

Consumers with little or no stock holdings reported growing concern about high prices, while those with large holdings reported little change, Spectrum News reported.

Hsu also warned in a report released with the survey that persistently elevated inflation expectations pose a risk to the Federal Reserve's effort to bring inflation back to its 2% target, Reuters reported. Fed officials meet next week.

The university's next release, the preliminary November reading, is scheduled for Friday, Nov. 6.

Image: A gas station price sign (file photo), by Eric Polk, Wikimedia Commons, CC BY-SA 4.0.

Yossi Schmidt, Founder and Editor-in-Chief, The Digital Free Press

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Sources: University of Michigan, Surveys of Consumers, "Final Results for October 2026" (Oct. 23, 2026): https://www.sca.isr.umich.edu/ ; Reuters via Duke FM, "US consumer sentiment near record low ahead of midterm elections" (Oct. 23, 2026): https://duke.fm/2026/10/23/us-consumer-sentiment-near-record-low-ahead-of-midterm-elections-2/ ; Spectrum News, "Consumer sentiment lingers near record low in October" (Oct. 23, 2026): https://spectrumlocalnews.com/nc/charlotte/politics/2026/10/23/consumer-sentiment-lingers-near-record-low-in-october-2026