The University of Michigan reported a final October consumer sentiment reading of 48.0 on Friday, down from 48.1 in September. That is the lowest level in five months, according to Bloomberg.
The index sits 10.4% below the 53.6 recorded in October 2025 and 15% below its February level, just before the Iran conflict began, the university said.
The Current Economic Conditions index fell to 46.7 from 50.9, a drop of 8.3%. The Index of Consumer Expectations rose to 48.8 from 46.3, an increase of 5.4%.
Joanne Hsu, director of the university's Surveys of Consumers, said the decline in current conditions came entirely from buying conditions for durable goods, which plunged 18% on higher interest rates and growing concern about the affordability of such purchases. The durable-goods gauge reached a record low, according to Bloomberg.
Year-ahead inflation expectations rose to 4.7% from 4.6% in September, the university said. Long-run expectations rose to 3.5% from 3.4%. Both increased for a second straight month and reached their highest readings since May.
The year-ahead figure exceeds the 3.4% recorded in February and every 2024 reading. The long-run figure is above the 2.8% to 3.2% range of 2024.
"After five years of above-target inflation, both short- and long-term inflation expectations have ticked up in recent months, exposing risks that elevated inflation expectations could become entrenched," Hsu said in a statement, according to Bloomberg.
Sentiment rose among Republicans and Democrats and fell among independents, the university said. Independents' sentiment has now dropped in each of the past three months, according to Bloomberg. Bloomberg also said the final reading came in above every forecast from the economists it polled.
Gasoline prices continue to run far over $4 per gallon, according to Bloomberg. Close to 70% of consumers anticipate higher borrowing costs over the coming 12 months, a share not seen in over three years, according to Bloomberg.
The index fell to 48.1 in September, its lowest reading in four months. Sentiment reached an all-time low of 44.8 in May after conflict in the Middle East disrupted oil markets.
A special report published Friday covers long-run inflation expectations in historical context. The university's next release, with preliminary November data, is scheduled for Friday, Nov. 6, at 10 a.m. ET.
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