Topline
Americans’ views on the U.S. economy deteriorated to their lowest level in months, as rising prices and inflation stuck to the “forefront” of consumers’ concerns, according to a widely tracked survey released Friday from the University of Michigan.
Earlier federal data indicated inflation continued to rise last month, as surveyors said rising prices remain at the “forefront” of consumers’ minds.
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Key Facts
Consumer sentiment—a monthly reading on Americans’ views on the economy—decreased from a preliminary reading of 55.1 to 53.6 in October, below the historical benchmark of 100 and the lowest reading since May (52.2), a reading of the University of Michigan’s survey found.
The revised-down reading for sentiment fell below Wall Street’s expectation to settle at 55, according to FactSet.
Americans’ views on current economic conditions fell to their lowest level since August 2022 (58.6), dropping from 60.4 in September to 58.6 in October, the survey found.
Americans expect prices to increase 3.9% over the next five to 10 years, above the 3.7% forecast in September, and for prices to rise 4.6% over the next year, down from last month’s 4.7%.
The Bureau of Labor Statistics reported Friday that prices increased 3% last month from September 2024, below economists’ estimates of 3.1%, as gas prices rose 4.1%, the largest monthly increase among all items tracked by the agency.
Why Are Americans Pessimistic About The Economy?
A decline in economic optimism in recent months is largely driven by consumers remaining “frustrated by the persistence of high prices,” according to the survey, which noted about half of respondents said their personal finances had worsened as a result. Joanne Hsu, the survey’s director, said in a statement that consumers “perceive few material changes” in economic circumstances from September to October, though “inflation and high prices remain at the forefront of consumers’ minds,” and there was “little evidence” an ongoing federal government shutdown deteriorated economic views. In the survey’s preliminary reading of consumer sentiment data, Hsu also cited weakening job prospects as an area of concern among Americans.
What To Watch For
The Federal Reserve will conclude its next policymaking meeting on Oct. 29, and investors are anticipating the central bank to once again lower interest rates by a quarter-point to between 3.75% and 4%, according to CME’s FedWatch tool. During its September meeting, the Fed appeared to be divided about how many times rates would be slashed by December, though “around half” of policymakers expected at least two additional cuts by the year’s end, according to minutes from the meeting released earlier this month.
Key Background
Economic confidence has steadily declined among Americans in recent months, as concerns about rising prices spread after President Donald Trump imposed tariffs on U.S. trade partners. Americans have also expressed pessimism about the labor market, with 27% of consumers saying jobs were “plentiful,” according to a survey by the Conference Board think tank, the lowest reading since February 2021. It’s not clear whether the labor market deteriorated again in September, after unemployment rose to 4.3% in August with just 22,000 nonfarm jobs added, as the Bureau of Labor Statistics has postponed releasing jobs data during the government shutdown. Reports from economists and investment firms suggest the labor market has worsened, however. The Carlyle Group estimated 17,000 jobs were added by U.S. employers last month, and ADP reported private-sector payrolls decreased by 32,000 in September, the largest decline since March 2023.
Further Reading
Source: https://www.forbes.com/sites/tylerroush/2025/10/24/economic-confidence-hits-five-month-low-consumers-frustrated-with-high-prices/
