Consumer sentiment holds steady in October's final reading; inflation expectations highest since May
The University of Michigan's sentiment index registered 48.0, a tenth of a point below September and up from the preliminary 46.3.
U.S. consumer sentiment held steady in October, with the University of Michigan's final reading coming in at 48.0 - a tenth of an index point below September's 48.1 and revised up from the preliminary 46.3 two weeks ago.
The details were mixed. The current-conditions gauge fell to 46.7 from 50.9, a decline the survey said was driven entirely by buying conditions for large purchases such as appliances and cars, which plunged 18% as consumers cited higher interest rates and worries about affordability. The expectations gauge rose to 48.8 from 46.3, and views of year-ahead business conditions improved about 14%, though they remain 16% below last October.
Inflation expectations moved higher for a second straight month, to their highest since May: consumers expect prices to rise 4.7% over the next year, up from 4.6% in September, and 3.5% over the longer run, up from 3.4% and above their 2024 range of 2.8% to 3.2%. The survey's director noted that sentiment is now 10% below a year ago and 15% below February, just before the Iran conflict began. The readings matter for the Federal Reserve, which meets next week; markets expect it to hold rates steady after September's first rate hike since 2023.
