American consumers are feeling worse about the economy than at any point in five months — and by one measure, worse than they felt during the pandemic.
The University of Michigan’s preliminary October sentiment index fell to 46.3 from 48.1 in September, missing expectations. The gauge of current conditions plunged to 44.7, the lowest reading on record, as frustration over the cost of living mounted across the political spectrum. Survey officials said consumers across party lines agree the economy’s trajectory has weakened since the start of the year.
The squeeze is visible in the household numbers. The average 30-year fixed mortgage rate rose to 7.4 percent this week, a three-year high. Year-ahead inflation expectations edged up to 4.7 percent, and buying conditions for durable goods deteriorated sharply under the weight of high prices and borrowing costs.
There was one counterweight: expectations for the future improved for the first time since July. But the survey’s director noted the gains among both Democrats and Republicans were offset by a decline among independents, and that sentiment dropped most steeply among lower-income households and those with smaller stock portfolios — families with the least room to absorb another price shock.
For retailers heading into the holiday season, the message is uncomfortable. The stock market may be at record highs, but the customers walking through the door believe times are harder than they were during a global pandemic — and they are spending accordingly.
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