The survey's headline index fell to 46.3 in its preliminary October reading, versus 48.1 in September
By Matt Grossman
Consumers' mood has darkened in October, according to the University of Michigan's monthly survey.
The survey's headline index fell to 46.3 in its preliminary October reading, versus 48.1 in September, according to data published Friday. Economists surveyed by The Wall Street Journal were expecting a smaller decline, to 48.
"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," said Joanne Hsu, the survey's director.
The drop returns sentiment closer to its record-low reading of 44.8, set in May. If sustained in the end-of-month reading, due later this month, October's would be the second-lowest level on record. Inflation, geopolitical uncertainty and a stable but staid job market have been weighing on consumer's spirits over the past 18 months.
The new reading reflects survey responses between Sept. 22 and Oct. 5.
Consumers' actual spending has remained buoyant, supported by wealth gains from a roaring stock market and by a stable employment backdrop. Wage growth has cooled, but unemployment remained at a relatively modest 4.2% in September, and layoffs have been scant.
But shoppers' feelings about the economy have been battered by high prices and persistent inflation. The latest frustration: soaring fuel costs, lifted by fallout from the war with Iran.
Expectations for inflation ticked higher, for both the near future and the longer term. Federal Reserve policymakers watch inflation expectations closely, out of concern that if consumers expect fast-price increases, they will increase their current-day spending and make those expectations self fulfilling.