The University of Michigan’s consumer sentiment index slipped to 46.3 in early October 2026, according to the preliminary reading, marking its lowest level since May’s record low and coming in below market forecasts of 47.6. Although year-ahead expectations for personal finances and business conditions improved slightly, assessments of buying conditions for durable goods worsened sharply, weighed down by elevated prices and higher borrowing costs.
The decline was especially pronounced among lower-income consumers and households with smaller equity holdings, underscoring their limited ability to absorb additional price increases. Discontent with the cost of living continues to build, and consumers across the political spectrum are increasingly reporting a worsening economic outlook compared with the beginning of the year.
At the same time, inflation expectations ticked higher. Short-term (one-year) inflation expectations rose to 4.7% from 4.6% in September, while long-run expectations increased to 3.5% from 3.4%.
