Consumer confidence fell in October as frustration over the higher cost of living weighed on Americans’ views on the economy, according to a University of Michigan survey.
Overall consumer confidence fell to 46.3 in October, down 1.8 points from September’s reading of 48.1. The preliminary reading was slightly below Wall Street expectations of 47.3.
“Frustration with the cost of living continues to grow, as consumers across the political spectrum believe the trajectory of the economy has weakened since the start of the year,” Joanne Hsu, director of the survey, said in the release.
With the midterm elections 25 days away, Hsu added that sentiment among Democrats and Republicans had improved, but that was offset by a decline in the number of independents.
Learn more: What is consumer trust and why is it important?
Consumers face a growing number of macroeconomic concerns: higher inflation; concerns about the US national debt, which now exceeds $40 trillion; and a rise in the benchmark 10-year U.S. Treasury yield (^TNX), which is likely to rise to 6% for the first time since 2000. The 10-year yield is often a gauge of global borrowing costs, and its recent rise has dampened Americans’ outlook for purchasing conditions.
This week, the average 30-year fixed mortgage rate increased to 7.4%, a three-year high, according to Freddie Mac survey data.
Confidence among groups with fewer resources to deal with price increases, such as lower-income consumers and those with smaller stock portfolios, declined this month.
As consumer prices rise and the war with Iran continues, Americans’ inflation outlook for the coming year rose to 4.7% this month, up from 4.6% last month.
Inflation expectations were well above the 3.4% rate recorded in February, when the war in the Middle East and the resulting energy shock began.
Gas prices have risen more than $1.50 on average since the war began, according to AAA, and have remained above $4 since mid-summer.
Long-term inflation expectations rose to 3.5% this month, slightly higher than September’s reading of 3.4%. In recent months, they have remained consistently above the range of 2.8% to 3.2% observed in 2024.
Brooke DiPalma is a reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email him at bdipalma@yahoofinance.com.
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