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

On Friday, The University of Michigan released the final results of its Surveys of Consumers for October.

• The Index of Consumer Sentiment increased to a reading of 70.5 in October, up from 70.1 in September. This is a month-over-month increase of 0.6% and up 10.5% year-over-year (63.8 in October 2023).
• Current Economic Conditions for October increased to a reading of 64.9, up from 63.3 in September. This is a month-over-month increase of 2.5% but down 8.1% year-over-year (70.6 in October 2023).
• The Index of Consumer Expectations decreased to a reading of 74.1 in October, down from 74.4 in September. This is a month-over-month decline of 0.4% but up 25.0% year-over-year (59.3 in October 2023).

In a statement accompanying the report, Surveys of Consumers Director Joanne Hsu said,

“Consumer sentiment lifted for the third consecutive month, inching up to its highest reading since April 2024. Sentiment is now more than 40% above the June 2022 trough. This month’s increase was primarily due to modest improvements in buying conditions for durables, in part due to easing interest rates. The upcoming election looms large over consumer expectations. Overall, the share of consumers expecting a Harris presidency fell from 63% last month to 57% in October. Sentiment of Republicans, who believe that a Trump presidency would be better for the economy, rose 8% on growing confidence that their preferred candidate would be the next president. In contrast, sentiment declined 1% for Democrats. As usual, Independents remain in between, with a 4% gain in sentiment this month. Regardless of the eventual winner, a sizable share of consumers will likely update their economic expectations based on the results of the election.

Year-ahead inflation expectations were unchanged from last month at 2.7%. The current reading falls within the 2.3–3.0% range seen in the two years prior to the pandemic. Long-run inflation expectations edged down from 3.1% last month to 3.0% this month, remaining modestly elevated relative to the range of readings seen in the two years pre-pandemic.”