Updated Oct 13, 2023 - Economy

Consumer sentiment drops this fall as Americans feel worse about the economy

Data: University of Michigan; Chart: Axios Visuals
Data: University of Michigan; Chart: Axios Visuals

Over the summer, we were alert to signs that ordinary Americans' perception of the economy was, at long last, starting to improve. Early signs are that sentiment has turned back downward with the onset of fall.

Driving the news: The preliminary October University of Michigan consumer sentiment survey showed a steep falloff in views about the economy. The index fell to 63, from 68.1 in September. It had reached a recent high of 71.6 in July.

  • The falloff was driven by drops in both survey respondents' assessment of current economic conditions and their expectations for the future.
  • Perhaps most worrying, survey respondents' expectations for inflation over the next year soared, to 3.8% from 3.2% in September. Long-run inflation expectations edged up to 3%, from 2.8%.

Between the lines: This may reflect a lagged impact of a surge in gasoline prices in late summer (prices have receded some so far in October) and a recent bumpy ride on Wall Street that has sent interest rates soaring.

  • Consumer sentiment was even lower for much of 2022, when inflation was at modern highs, but remains far below the levels that were the norm in the 2010s.
  • In fact, if you go back before the current inflationary episode, the last time sentiment fell below current levels was in 2011, when there was a debt ceiling showdown.
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