U.S. Consumer Sentiment Falls to 46.3 as Inflation Expectations Rise

U.S. consumer sentiment slipped again in early October as households reported much worse views of present economic conditions and higher inflation expectations, according to preliminary survey results released Friday.

The University of Michigan’s Index of Consumer Sentiment fell to 46.3 in October from 48.1 in September, a 3.7% monthly decline. The reading was 13.6% below its October 2025 level of 53.6. The survey’s final October estimate is scheduled for October 23.

Current conditions weakened sharply

The headline decline masked a split between how consumers described the economy now and how they viewed the months ahead. The Current Economic Conditions index dropped to 44.7 from 50.9, a 12.2% decline in one month and a 23.7% drop from a year earlier.

By contrast, the Index of Consumer Expectations rose to 47.3 from 46.3, an increase of 2.2%. That measure remained 6% below its October 2025 reading.

Survey director Joanne Hsu said expectations for personal finances and business conditions improved slightly, but buying conditions for durable goods fell sharply because of high prices and borrowing costs. The deterioration was especially pronounced among lower-income consumers and households with smaller stock portfolios, the university said.

Inflation expectations moved higher

Consumers’ year-ahead inflation expectations increased to 4.7% from 4.6% in September. Long-run inflation expectations rose to 3.5% from 3.4%. Both measures increased for a second consecutive month and reached their highest readings since May, according to the survey.

Those expectations do not measure actual inflation. They capture what surveyed households think prices will do, but Federal Reserve officials watch them because persistent increases can influence wage demands, purchasing decisions and businesses’ pricing behavior.

The higher readings arrive as borrowing costs remain elevated. Minutes from the Federal Reserve’s September meeting showed that most officials expected another rate increase would be appropriate in 2026, while leaving the timing dependent on incoming inflation and labor-market data.

How this differs from consumer confidence

The Michigan survey is separate from the Conference Board’s consumer-confidence index. AskNovus reported earlier that the Conference Board measure fell to 81.9 in September. The two surveys use different questions, samples and index scales, so their headline numbers should not be compared directly.

The Michigan results are based on interviews with U.S. consumers and place substantial weight on personal finances, buying conditions and inflation expectations. The preliminary estimate can be revised when additional interviews are included in the final monthly release.

What the October reading means

The report does not by itself show that consumer spending has contracted. Sentiment measures can remain weak even while household outlays rise. The sharp decline in current conditions, however, indicates that many consumers feel more pressure from prices and financing costs now, even as their expectations for the future improved modestly.

For policymakers and markets, the inflation-expectations figures are the more consequential part of the release. The one-year estimate remains well above the levels recorded in 2024, while the five-year measure also moved above its 2024 range. The October 23 final report will show whether those readings hold after the full month’s sample is collected.

Sources

• University of Michigan Surveys of Consumers, preliminary October 2026 results — October 9, 2026
• FXStreet, “UoM Consumer Sentiment Index comes at 46.3” — October 9, 2026

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