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

The University of Michigan on Friday (10-13-23) released the preliminary results of its Consumer Sentiment Index (CSI) for October.

• The Index of Consumer Sentiment declined to a reading of 63.0 in October, down from 68.1 in September. This is a month-over-month decline of 7.5% but up 5.2% year-over-year (59.9 in October 2022).
• The Current Economic Conditions fell to a reading of 66.7 in October, down from 71.4 in September. This is a month-over-month decline of 6.6% but up 1.7% year-over-year (65.6 in October 2022).
• The Index of Consumer Expectations dropped to a reading of 60.7 in October, down from 66.0 in September. This is a month-over-month decline of 8.0% but up 8.0% year-over-year (56.2 in October 2022).

In remarks and analysis prepared to accompany the release of the preliminary results for October, Surveys of Consumers Director Joanne Hsu said:

“Consumer sentiment fell back about 7% this October following two consecutive months of very little change. Assessments of personal finances declined about 15%, primarily on a substantial increase in concerns over inflation, and one-year expected business conditions plunged about 19%. However, long-run expected business conditions are little changed, suggesting that consumers believe the current worsening in economic conditions will not persist. Nearly all demographic groups posted setbacks in sentiment, reflecting the continued weight of high prices.

Year-ahead inflation expectations rose from 3.2% last month to 3.8% this month. The current reading is the highest since May 2023 and remains well above the 2.3–3.0% range seen in the two years prior to the pandemic. 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 remain elevated relative to the 2.2–2.6% range seen in the two years pre-pandemic.”