U.S. consumer confidence falls to second-lowest level on record as expected inflation rises to 4.7%

Washington — U.S. consumer confidence fell in October to its second-lowest level on record, while inflation expectations rose again, according to the final reading of the University of Michigan Surveys of Consumers released Friday, October 23.

The Index of Consumer Sentiment slipped to 48.0 in October from 48.1 in September, a small decline that leaves it 10.4% below its level a year ago and 15% below February, just before the war with Iran began. October's reading is the second-lowest ever recorded, above only the all-time low of 44.8 set in May, shortly after that conflict started.

The deterioration was concentrated in current conditions, which fell to 46.7 from 50.9 in September, driven by an 18% plunge in buying conditions for durable goods such as appliances, electronics and vehicles, amid high interest rates and growing affordability concerns. The expectations index, by contrast, rose slightly to 48.8 from 46.3.

Year-ahead inflation expectations rose from 4.6% in September to 4.7% in October, and long-run expectations increased from 3.4% to 3.5%, in both cases the highest readings since May. "Purchasing power continues to dominate consumer views of the economy," said Joanne Hsu, director of the survey, who warned of the risk that high inflation expectations could become entrenched.

The decline was led by independent voters, whose index fell to 42.4 from 47.7 in September, a key bloc just days ahead of the November 3 midterm elections, in which the cost of living is the central issue. The Federal Reserve concludes its monetary policy meeting this week, with markets watching for any signal on interest rates.

Photo: A Lo Claro Archive

Source: Reuters