The numbers: The University of Michigan’s gauge of consumer sentiment fell to a preliminary October reading of 71.4 from a final September reading of 72.8. Economists polled by the Wall Street Journal expected a reading of 73.
Key details: A gauge of consumer’s views of current conditions fell to 77.9 in October from 80.1 in September, while an indicator of expectations slipped to 67.2 from 68.1 in September.
Household inflation expectations for the next 5 years fell slightly to 2.8%, above its pre-pandemic level of 2.3%. Expectations for 1-year inflation edged up 4.8% from 4.6% in September.
Big picture: While consumer sentiment remains above the roughly 10-year low seen in August, Americans remain wary of the impact of the ongoing COVID-19 pandemic and persistently high inflation.
What UMich said: “Consumer sentiment has remained for the past three months at the lows first recorded in response to last year’s shutdown of the economy,” wrote Richard Curtin, chief economist for University of Michigan’s Survey of Consumers. “The delta variant, supply chain shortages, and reduced labor force participation rates will continue to dim the pace of consumer spending into 2022.”
“There is another, less tangible factor that has contributed to the slump in optimism: confidence in government economic policies has significantly declined during the past six months,” he added. “When asked about their confidence in economic policies, favorable evaluations fell to 19% in early October from Biden’s honeymoon high of 31% in April, while unfavorable policy evaluations rose to 48% in early October from 32% in April.”