University of Michigan Reports Final Results of Its Consumer Sentiment Index for October

The University of Michigan on Friday (10-27-23) released the final results of its consumer sentiment indexes for October.

• The Index of Consumer Sentiment declined to a reading of 63.8 in October, down from 67.9 in September. This is a month-over-month decline of 6.0% but up 6.5% year-over-year (59.9 in October 2022).
• Current Economic Conditions fell to a reading of 70.6 in October, down from 71.1 in September. This is a month-over-month decline of 0.7% but up 7.6% year-over-year (65.6 in October 2022).
• The Index of Consumer Expectations dropped to a reading of 59.3 in October, down from 65.8 in September. This is a month-over-month decline of 9.9% but up 5.5% year-over-year (56.2 in October 2022).

In remarks accompanying the report, Surveys of Consumers Director Joanne Hsu said:

“Consumer sentiment confirmed its early-month reading, falling back about 6% this October following two consecutive months of very little change. This decline was driven in large part by higher-income consumers and those with sizable stock holdings, consistent with recent weakness in equity markets. Across all consumers, one-year expected business conditions plunged 16% and expectations over consumers’ own personal finances in the year ahead fell 8%, reflecting ongoing concerns about inflation and, to a lesser degree, uncertainty over the implications of negative news both domestically and abroad.

Year-ahead inflation expectations rose from 3.2% last month to 4.2% this month, the highest reading since May. Long-run inflation expectations edged up from 2.8% last month to 3.0% this month, again staying within the narrow 2.9–3.1% range for 25 of the last 27 months. Long-run inflation expectations remained elevated relative to the 2.2–2.6% range seen in the two years pre-pandemic.”