The University of Michigan Consumer Sentiment Index increased to 48.0 in late October 2026, improving from the preliminary estimate of 46.3. This increase, despite improvements in sentiment among Republicans and Democrats, was unable to change the overall situation due to a decline in sentiment among independents, and the index remains at its lowest level in the past five months.
Changes in Business Conditions
Business conditions for the coming year have improved by about 14 percent; however, this index remains 16 percent lower than its level in October 2025. This indicates that while forecasts have improved, economic conditions have not yet reached an acceptable level.
Decline in Current Conditions and Concerns about Purchasing Power
The decline in the current conditions sub-index is entirely due to the conditions for purchasing durable goods, which have decreased by 18 percent. This decline has been caused by rising interest rates and increasing concerns about the affordability of goods. Purchasing power remains a dominant topic in consumer opinions about the economy, with current sentiment 10 percent lower than a year ago and 15 percent lower than in February, prior to the conflicts in Iran.
Inflation Expectations
Inflation expectations for the coming year have risen to 4.7 percent, up from 4.6 percent in September. Additionally, long-term inflation expectations have also increased to 3.5 percent from 3.4 percent. This rise in expectations reflects growing consumer concerns about future costs, and its impact on their purchasing behavior could be significant.
