Calendar › University of Michigan consumer sentiment › 2026-10-23

UMich Sentiment Revised Up to 48.0 vs 46.3 Est — Inflation Expectations Hold at 4.7%

Fundamentals · 2026-10-23

Final October consumer sentiment 48.0 against a 46.3 consensus (TradingEconomics), revised up 1.7 points from the preliminary and 0.1 below September's 48.1: −0.2% m/m, −10.4% y/y, still the second-lowest of 678 readings since 1952. Current conditions 46.7, revised up from 44.7 but down 8.3% on the month, so it is no longer a record low; May's 45.8 stands. Expectations 48.8, up from 47.3 preliminary and +5.4% on September. Year-ahead inflation expectations 4.7%, long-run 3.5%, both unchanged from the preliminary, both up for a second month to their highest since May. Buying conditions for durables fell 18% on higher interest rates and affordability. Sentiment is 15% below February, before the Iran conflict. Next: preliminary November, Friday 6 November.

What It Changes

• The inflation read is unchanged, and it is the part that matters. Year-ahead expectations at 4.7% and long-run at 3.5% held exactly at their preliminary readings and matched consensus. Five days before the 27-28 October FOMC, neither horizon gave the Fed a reason to look past prices.
• The mood was revised less bleak. Sentiment rose 1.7 points from the preliminary, and current conditions 2.0. The headline is flat on the month rather than down 3.7%, as the preliminary had it.
• Our 9 October brief called current conditions a record low. The final takes that back. At 46.7 it is the second-lowest of 677 readings, behind May 2026's 45.8. The drop was still 8.3% in a month, driven entirely by durables buying.
• The survey's own special report raises the stakes. Released with today's data, it argues that long-run expectations are ratcheting higher the way they did in the 1960s and 70s, and that consumers see tariffs and oil as ongoing inflation, not one-time price jumps.

Impact

• USD — Neutral — inflation expectations matched both the preliminary and consensus, so there was nothing new for rates; DXY −0.01% from 09:59 to 10:15 ET and +0.11% on the day.
• US Indices (ES / NQ / YM / RTY) — Neutral — a sentiment beat against a preliminary that most of the market had already absorbed, with inflation expectations unchanged.
• From 09:59 to 10:15 ET: ES −0.10%, NQ −0.06%, YM −0.26%, RTY −0.35%. The losses extended moves already running before 10:00, led by the same Dow and small-cap weakness seen all morning, so they are not a clean read on this release.
• RTY is the index closest to the survey's weak spot. The 18% plunge in durables buying conditions is a big-ticket, rate-sensitive consumer story, and small caps are the most exposed to both halves of it.
• Gold (GC) — Neutral — unchanged inflation expectations give gold no new input. GC −0.47% from 09:59 to 10:15 ET, to −1.04% on the day, but gold has been falling against both lower yields and a softer dollar all week, so the move cannot be pinned on this print.

Inside The Number

The final Index of Consumer Sentiment for October was 48.0, against a consensus of 46.3, which was the preliminary reading from 9 October. That is a 1.7-point upward revision in the second half of the month. Against September's 48.1, sentiment slipped just 0.1 points, or 0.2%. Survey director Joanne Hsu calls it holding steady. It is 10.4% below October 2025's 53.6 and, per Hsu, 15% below February, just before the Iran conflict began.

Where 48.0 sits. The University of Michigan's history file has 678 sentiment readings back to November 1952. Only May 2026's 44.8 is lower. September's 48.1 is third. Five of the six lowest readings on record have come in 2026.

Current conditions were revised up but still fell hard. The Current Economic Conditions index finished at 46.7, up from 44.7 preliminary but down 4.2 points, or 8.3%, from September's 50.9, and 20.3% below a year ago. Our preliminary brief reported 44.7 as the lowest of 677 readings. With the full sample, that record does not hold: May 2026's 45.8 remains the low, and October is second. Hsu attributes the whole decline to one component: buying conditions for durables plunged 18%, on higher interest rates and growing worries about whether such purchases are affordable.

Expectations rose further. The Index of Consumer Expectations finished at 48.8, up from 47.3 preliminary and 46.3 in September, a 5.4% monthly gain. It is still 3.0% below a year ago and the 13th-lowest of 673 readings. Year-ahead business conditions improved about 14% on the month, but they stand 16% below last October.

The partisan split held from the preliminary. Sentiment rose among both Republicans and Democrats and fell among independents, and the independents' decline balanced the other two. The survey's own research finds the national number tracks independents.

Year-ahead inflation expectations: 4.7%. Up from 4.6% in September and 4.0% in August, unchanged from the preliminary, and equal to April. Only May's 4.8% is higher in 2026. Hsu notes that 4.7% "substantially exceeds" February's 3.4%, before the conflict, and every 2024 reading. It is above October 2025's 4.6%.

Long-run inflation expectations: 3.5%. Up from 3.4% in September after three months at 3.3%, unchanged from the preliminary. That equals April and is below only May's 3.9% this year, and it sits above the 2024 range of 2.8% to 3.2%. Both horizons have now risen for two straight months to their highest since May. Against October 2025's 3.9%, long-run expectations are still lower than a year ago.

Against the running story. Hard data has been holding up: initial claims are near their lowest of the year, and this morning's flash PMIs put business activity close to a five-year high, with selling prices rising at the fastest rate since 2022. The consumer survey agrees on prices and disagrees on mood. Households are paying more, expect to keep paying more, and are pulling back on big-ticket purchases.

The Internals

Headline indexes:

Index · October final · October preliminary · Revision · September · October 2025 · Month change · Year change

Consumer sentiment · 48.0 · 46.3 · +1.7 · 48.1 · 53.6 · −0.2% · −10.4%

Current economic conditions · 46.7 · 44.7 · +2.0 · 50.9 · 58.6 · −8.3% · −20.3%

Consumer expectations · 48.8 · 47.3 · +1.5 · 46.3 · 50.3 · +5.4% · −3.0%

Inflation expectations, median:

Horizon · October final · October preliminary · September · August · October 2025 · 2024 range

Year ahead · 4.7% · 4.7% · 4.6% · 4.0% · 4.6% · Above all 2024 readings

Long run, 5 to 10 years · 3.5% · 3.5% · 3.4% · 3.3% · 3.9% · 2.8% to 3.2%

Against consensus (TradingEconomics), which was the preliminary:

Measure · Consensus · Actual · Gap

Consumer sentiment · 46.3 · 48.0 · +1.7

Current conditions · 44.7 · 46.7 · +2.0

Consumer expectations · 47.3 · 48.8 · +1.5

Year-ahead inflation · 4.7% · 4.7% · 0.0pp

Long-run inflation · 3.5% · 3.5% · 0.0pp

Sentiment and inflation expectations through 2026, final readings:

Month · Sentiment · Current conditions · Expectations · Year-ahead inflation · Long-run inflation

January · 56.4 · 55.4 · 57.0 · 4.0% · 3.3%

February · 56.6 · 56.6 · 56.6 · 3.4% · 3.3%

March · 53.3 · 55.8 · 51.7 · 3.8% · 3.2%

April · 49.8 · 52.5 · 48.1 · 4.7% · 3.5%

May · 44.8 · 45.8 · 44.1 · 4.8% · 3.9%

June · 49.5 · 47.7 · 50.7 · 4.6% · 3.3%

July · 55.2 · 54.8 · 55.4 · 4.2% · 3.3%

August · 51.7 · 51.9 · 51.5 · 4.0% · 3.3%

September · 48.1 · 50.9 · 46.3 · 4.6% · 3.4%

October · 48.0 · 46.7 · 48.8 · 4.7% · 3.5%

Where October sits in the full history:

Reading · Value · Rank

Consumer sentiment · 48.0 · 2nd-lowest of 678 readings since November 1952

Lowest sentiment on record · 44.8 · May 2026

Current economic conditions · 46.7 · 2nd-lowest of 677 readings since February 1951

Lowest current conditions on record · 45.8 · May 2026

Consumer expectations · 48.8 · 13th-lowest of 673 readings

Year-ahead inflation expectations · 4.7% · Highest since May 2026's 4.8%

Long-run inflation expectations · 3.5% · Highest since May 2026's 3.9%

What The Consumers Actually Said

Durables buying drove the whole current-conditions drop. Hsu attributes October's decline in current conditions entirely to buying conditions for durables, which fell 18%. Consumers cited higher interest rates and rising worries about whether large purchases are affordable. Purchasing power, she writes, still dominates how consumers see the economy.

Business conditions improved from a low base. Year-ahead expectations for business conditions rose about 14% on the month but remain 16% below a year earlier.

Today's special report: the risk of entrenchment. The survey released *Risks of Entrenchment: Long-Run Inflation Expectations in Recent and Longer Historical Context* with the final data. Its main points:

• Long-run expectations are above both reference ranges. Using web interviews back to 2017, current readings are well above the 2024 range, when inflation was falling but above target, and the 2019 range, when inflation was at or below target. The 2024 easing never brought them back to pre-pandemic levels.
• Two supply shocks in quick succession. Expectations rose with the 2025 tariff escalation, eased through the rest of that year, and reversed again in 2026 as the Iran conflict lengthened and energy prices kept rising. They ticked up again in September and October.
• The 1960s-80s pattern. In each inflation episode of that era, expectations surged and then eased, but each trough was higher than the last, and each new surge started from a higher base. The report argues the post-pandemic period is the closer analogue to the late 1960s than to the final episode of the Great Inflation.
• Consumers do not see a one-time price jump. Interviews give little sign that consumers treat tariffs or oil shocks as one-off rises in the price level rather than continuing inflation, and the rise in expectations this year is not confined to one side of politics.
• Spending is the warning sign. If part of today's resilient spending is precautionary, buying before prices rise further, the report warns that disinflation could be even harder to achieve.
• The tail is fat too. Mean expectations, the 75th percentile, the share expecting very high inflation and the spread between answers all sit above their 2024 and 2019 ranges.

Against This Morning's Open

• The Open tabled sentiment at 46.3, year-ahead expectations at 4.7% and long-run at 3.5%, and named the inflation expectations "the gold and rates input" — The Open.
• It said a rise in the 1-year figure would conflict with the bond market's growth read after Thursday's rally. The 1-year held at 4.7%, so that conflict did not arise; the headline beat came from sentiment, which The Open did not flag as the swing factor.

What This Sets Up

• Next release: preliminary November, Friday 6 November, 10:00am ET (University of Michigan). It lands after the 27-28 October FOMC.
• The read to confirm or break is whether inflation expectations keep stepping up. A third straight rise would take the year-ahead figure to May's 4.8% and the long-run toward May's 3.9%, the pattern the special report warns about.
• Watch durables buying conditions. They drove the whole current-conditions drop this month; a second fall would point at big-ticket spending, not just mood.
• Watch the independents. They offset gains among Republicans and Democrats in October, and the survey's research says the national number follows them.

What Is This?

• What it is: The University of Michigan Surveys of Consumers, run monthly since 1952 (quarterly before 1978) and directed by Joanne Hsu. The Index of Consumer Sentiment combines two sub-indexes: current economic conditions (personal finances now, buying conditions for large household items) and consumer expectations (expected personal finances, business conditions over one and five years). It also reports median year-ahead and long-run (5 to 10 year) inflation expectations. A preliminary reading comes out early in the month and a final reading two weeks later; this is the October final.
• Why it matters: Consumer spending is about two-thirds of the US economy, and this is the longest-running read on how households feel about it. The inflation-expectations questions matter even more right now: the Fed watches them for signs that high inflation is becoming self-sustaining, and the long-run measure is one of its main de-anchoring indicators.
• How to read it: The preliminary usually carries the market reaction; the final mainly confirms or revises it, and this month it revised the mood up while leaving inflation expectations unchanged. Sentiment and spending often diverge, since a gloomy consumer with a job keeps spending, so read this alongside retail sales and the labour data, and watch current conditions, which includes buying conditions, as the closest link to purchases. Year-ahead expectations respond quickly to fuel prices, while long-run expectations are the harder signal. And the index has a known partisan component; the survey tracks it by party, and its own research finds the national number follows independents.

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_For informational purposes only. Not investment advice._