U.S. consumer sentiment fell in early October as Americans reported growing concerns about the cost of living, elevated borrowing costs and the broader economic outlook, according to preliminary data from the University of Michigan.
The university’s Consumer Sentiment Index declined to 46.3 in October 2026, its lowest reading since May’s record low and below market expectations of 47.6.
The decline reflects continued pressure on household finances, particularly among consumers with lower incomes and smaller stock portfolios, who have less financial flexibility to absorb additional price increases.
Current Economic Conditions Reach Record Low
The Current Economic Conditions Index fell to an all-time low of 44.7, reflecting weaker assessments of household purchasing conditions.
Consumers reported particularly unfavorable conditions for buying durable goods, including vehicles, appliances and other major household purchases.
Persistently high prices and borrowing costs have made these purchases more expensive, adding to the financial pressures already affecting household budgets.
The deterioration was especially pronounced among lower-income households and consumers with smaller stock portfolios.
These groups generally have fewer financial resources available to offset rising living expenses, leaving them more exposed to changes in prices and financing costs.
Inflation Expectations Increase
The preliminary survey also showed a rise in consumers’ inflation expectations.
Year-ahead inflation expectations increased to 4.7% in October from 4.6% in September.
Long-term inflation expectations also moved higher, rising to 3.5% from 3.4% in the previous month.
These figures measure what consumers expect inflation to be over future periods rather than the current inflation rate.
Key figures — October 2026 preliminary survey
| Consumer Sentiment Index | 46.3 |
| Market expectation | 47.6 |
| Current Economic Conditions | 44.7 |
| Year-ahead inflation expectations | 4.7% |
| Long-run inflation expectations | 3.5% |
Cost of Living Weighs on Household Confidence
The survey indicates that concerns about affordability continue to influence how Americans assess the economy.
Consumers across the political spectrum reported a worsening economic outlook since the beginning of the year, suggesting that dissatisfaction with current financial conditions extends beyond individual political affiliations.
The results also highlight differences in how households experience economic pressures.
Consumers with larger financial portfolios may have additional resources to manage higher expenses, while households with limited savings or investment holdings can face greater constraints when prices and borrowing costs increase.
These differences are particularly relevant for spending on durable goods, where purchases frequently involve financing or substantial upfront payments.
Consumer Confidence Remains Important for the U.S. Economy
Consumer sentiment is closely monitored because household spending represents a major component of U.S. economic activity.
Changes in confidence can provide information about consumers’ willingness to make major purchases, take on debt or adjust discretionary spending.
However, sentiment readings do not necessarily translate directly into changes in actual consumer spending. Employment, income growth, access to credit and household savings also influence purchasing decisions.
The October preliminary results show that concerns about affordability and future inflation remain central to Americans’ economic expectations.
With both short-term and long-term inflation expectations increasing, the survey adds another measure of the financial pressures facing U.S. households as policymakers and businesses assess the outlook for consumer demand.
Source: University of Michigan, Surveys of Consumers. Preliminary October 2026 figures supplied for this report.
