Consumer sentiment fell again in October. The University of Michigan’s preliminary reading, published on October 9, 2026, came in at 46.3, down 1.8 points, or about 3.7%, from September and 13.6% below a year earlier. The survey is one of the most closely followed gauges of how households feel about their finances, and the October details point to a consumer who is increasingly worried about the cost of living.
The October numbers
| Index (preliminary, October 2026) | Reading | Context |
|---|---|---|
| Consumer Sentiment | 46.3 | Down 3.7% from September; down 13.6% from a year ago |
| Current Economic Conditions | 44.7 | Down 12.2% from September; forecast was 50.5 |
| Consumer Expectations | 47.3 | Up 2.2% from September; forecast was 45.9 |
| 1-year inflation expectations | 4.7% | Up from 4.6% |
| 5-year inflation expectations | 3.5% | Up from 3.4% |
Source: University of Michigan survey data as summarized by Advisor Perspectives, October 9, 2026.
Current conditions did the damage
The headline decline masked a split. The expectations index, which captures how consumers see the months ahead, actually rose 2.2% and beat the 45.9 forecast. The current conditions index, which captures how people assess their finances and buying conditions today, fell 12.2% in a month and came in well below the 50.5 forecast. It is down 23.7% from a year ago.
That divergence suggests that consumers are less negative about the future than about the present. Today’s prices, rather than tomorrow’s outlook, appear to be the main source of frustration. Joanne Hsu, the survey’s director, said that “frustration over cost-of-living continues to mount,” and that sentiment among lower-income consumers dropped steeply.
Inflation expectations edged higher
Households expect prices to rise 4.7% over the next year, up from 4.6% in September, and 3.5% per year over the next five to ten years, up from 3.4%. These are small changes, and survey expectations often differ from realized inflation. They matter because policymakers watch whether longer-run expectations remain anchored; sustained increases in long-run expectations can complicate decisions about interest rates. Inflation and Federal Reserve coverage appears elsewhere on this site.
How sentiment relates to spending
Sentiment and spending do not always move together. In recent months, Americans have kept spending even as surveys turned gloomy. The September retail sales report showed a 0.8% gain, though that figure was boosted by gasoline and the gain excluding gas stations was 0.2%. Economists sometimes describe this as the gap between what people say and what they do: households may grumble about prices while continuing to buy necessities and, for higher-income households, discretionary items.
A few reasons the relationship can be loose:
- Necessities: Spending on housing, food, utilities and fuel continues regardless of mood, and higher prices on those items raise nominal spending.
- Income differences: Higher-income households, often supported by asset wealth, can spend even when sentiment is low, while lower-income households may be cutting back, as the survey’s commentary suggests.
- Timing: Sentiment often turns before spending does. A prolonged slump in sentiment can precede slower spending, but not always.
Limits of the survey
Several cautions apply. The October figure is preliminary and can be revised in the final reading, which is scheduled for October 23, 2026. The index is a survey with sampling error, and monthly changes of a point or two may not be statistically meaningful. Sentiment can also be influenced by the news cycle, political views and stock market moves. And a low level does not map neatly to recession: sentiment has been weak at times when the economy kept growing.
It also helps to note that a level of 46.3 sits far below the values households reported a year earlier, around 53.6 when derived from the reported 13.6% decline. Comparisons to long-run history are best made with the underlying data series from the University of Michigan.
What to watch next
- October 23: the final October sentiment reading, to see whether current conditions and inflation expectations are revised.
- October 29: the first official estimate of third-quarter GDP from the Bureau of Economic Analysis, which will show how much consumer spending contributed.
- November 6: the October jobs report. Slower hiring and a higher unemployment rate in September are consistent with the cautious mood.
- Gasoline and grocery prices: the items households notice most often, and the likeliest drivers of the cost-of-living frustration the survey describes.
Taken together, the October survey describes a household sector that is spending but unhappy, with the sharpest deterioration in how people rate present conditions. Whether that mood eventually shows up in slower spending is one of the central questions for the fourth quarter.
This article is for informational purposes only and is not investment advice.
Sources: Advisor Perspectives (University of Michigan October 2026 preliminary survey summary, October 9, 2026); La Nacion (September retail sales coverage, October 15, 2026); U.S. Bureau of Labor Statistics (Employment Situation, September 2026); InvestingLive (GDPNow update, October 15, 2026).