Consumer Confidence Falls Again as Inflation Worries Linger

Americans Grow Uneasy About the Economy

Consumer confidence dropped for the third consecutive month in October, signaling growing concern among Americans about inflation and job stability. According to the University of Michigan’s consumer sentiment index released Friday, confidence dipped 1.5% to 53.6%. Though the index has recovered slightly since reaching a three-year low in April, it remains below January levels, reflecting persistent economic unease.

Inflation and Job Market Worries

Experts say the downturn is largely driven by affordability concerns. “The lower to median end of the income spectrum are increasingly concerned about job prospects and income prospects,” said EY-Parthenon chief economist Greg Daco. Inflation expectations also crept upward this month, showing that high prices remain top of mind for most Americans.

Joanne Hsu, director of consumer surveys at the University of Michigan, noted that inflation “remains at the forefront of consumers’ minds,” underscoring the challenge the Federal Reserve faces as it works to bring inflation closer to its 2% target.

Broader Economic Context

Despite worries about the economy, few consumers mentioned the recent government shutdown as a factor—only about 2%, compared with 10% during the 2019 shutdown. The Bureau of Labor Statistics’ latest Consumer Price Index showed inflation rising at an annual rate of 3% in September, slightly below expectations but still higher than the Fed’s goal.

The index serves as a key measure of Americans’ views on jobs, wages, inflation, and personal finances. As inflation pressures persist and the labor market softens, the Federal Reserve’s upcoming rate decision will be closely watched by investors and consumers alike.