US Consumer Sentiment Drops on High Cost of Living

U.S. consumer sentiment fell slightly this month, a new report found, with many people expressing concern over the high cost of living.
On Friday, a new report from the University of Michigan’s consumer sentiment index found Americans’ confidence in the economy taking a slight dip this month, following two consecutive months of modest improvement.
The University of Michigan’s consumer sentiment index dropped to 68.9 in October, down from 70.1 in September—the highest level recorded since May.
“Consumers continue to express frustration over high prices,” Joanne Hsu, director of consumer surveys at the university, told The Associated Press (AP).
Hsu noted that many consumers seem to be holding off on forming a clear opinion about the economy as they wait for the outcome of the presidential campaign.
The survey hit its lowest point in June 2022 when inflation peaked at 9.1 percent, but has since climbed roughly 40 percent, though it still lags far behind pre-pandemic levels. In October, Republican respondents reported a sharper decline in sentiment compared to Democrats.
Last month, U.S. inflation rates likely hit its lowest point since February 2021, potentially clearing the way for another Federal Reserve rate cut.
The consumer price index is expected to have risen 2.3 percent in September compared to 12 months earlier, according to economists surveyed by FactSet. This marks a drop from August’s 2.5 percent increase.
The small increase is expected to reflect lower gas prices and a modest rise in food costs, keeping it close to the Fed’s 2 percent inflation target. Over two years ago, inflation had surged to a peak of 9.1 percent.
The inflation data follows a mostly healthy jobs report from last week, which showed that hiring had accelerated in September, and the unemployment rate dropped to 4.1 percent from 4.2 percent. Additionally, the economy expanded at a 3 percent annual rate in the April-June quarter, with similar growth likely continuing into the third quarter.
Last month, the Conference Board, a business research group, released a report showing that its consumer confidence index levels fell to 98.7 in September, a decrease from the 105.6 figure recorded in August. According to the Conference Board, the decline seen in September was the largest month-to-month decrease since August 2021.
Dana Peterson, the Conference Board’s chief economist, said to the AP, “Consumers’ assessments of current business conditions turned negative while views of the current labor market situation softened further.”
Peterson also noted that consumers are currently more pessimistic about the future of the job market throughout the U.S.
This article includes reporting from The Associated Press.