Consumer sentiment drops in October, approaches record low

Pop quiz! How are consumers feeling: dour, dejected, or downbeat? Hey, why not all three?

Consumer sentiment took a distinctly dark (call it dour, call it dejected, call it downbeat) turn in October, according to the University of Michigan’s closely watched monthly survey of consumers.

Overall consumer sentiment dipped to 46.3 this month, down from 48.1 in September, per a preliminary reading conducted between September 22 and October 5. That drop brings consumer sentiment near a record-low reading of 44.8 in May. Should October’s preliminary reading hold by the final reading at the end of the month, it would mark the second-lowest sentiment measure yet, according to the Wall Street Journal.

“Frustration over cost-of-living continues to mount, as consumers across the political spectrum believe that the trajectory of the economy has weakened since the beginning of the year,” Joanne Hsu, the survey’s director, said in a statement.

“While year-ahead expectations for personal finances and business conditions crept up slightly, buying conditions for durables plummeted amid high prices and borrowing costs,” she noted.

Even as sentiment sours, consumer spending has stayed solid. Aggregated credit and debit card spending per household climbed 6.2% YoY in September, according to an October 9 report from the Bank of America Institute.

“One striking thing about recent card spending, in our view, is that it is well balanced across categories,” the report’s authors wrote. “For example, both spending on retail (excluding gasoline) and services grew strongly YoY in September, at 3.5% and 5.4%, respectively. Meanwhile, retail spending is showing notably better momentum than in 2025.”

Consumers’ expectations for inflation in the year ahead rose slightly from September’s, to 4.7%. “The current reading substantially exceeds the 3.4% seen in February before the Iran conflict began, along with all 2024 readings,” Hsu said in the UMich statement.

The next government data report on inflation comes Wednesday, when the Bureau of Labor Statistics will release the Consumer Price Index numbers for September.