Josh Weiner
The University of Michigan’s Consumer Sentiment Index fell to 48.0 in October from 48.1 in September, marking the second-lowest reading on record and sitting just above the all-time low of 44.8 set in May, as households head into the November midterm elections deeply pessimistic about the economy.
Much of the pressure traces back to continuing tensions between the US and Iran, which have pushed up prices at both the grocery store and the pump. Gasoline prices are up roughly 45% since the Iran war began, the 30-year mortgage rate has climbed back to 7.4%, and small-business sales are running below last year’s levels.
The sentiment decline has been especially pronounced among political independents, whose confidence reading dropped to 42.4, only slightly above the group’s all-time low of 40.6 reached in May, suggesting economic anxiety is cutting across the electorate rather than concentrating in one political camp.
Since January, the share of independents citing inflation pressures as hurting their financial situation has risen 27%, while the same measure has jumped 52% among Republicans and 15% among Democrats, pointing to inflation concern worsening broadly, if unevenly, across party lines.
Despite confidence sitting at its lowest level since 2014, actual consumer spending rose in August, a disconnect that complicates efforts to read grim sentiment data as a straightforward signal of how households are actually behaving with their wallets.
That gap between what Americans say about the economy and what they actually do with their money is a useful caution heading into the midterms: sour sentiment readings may reflect genuine anxiety, but they aren't necessarily a reliable predictor of either spending patterns or election outcomes.
