Consumer confidence slid for the third month in a row, new data shows, a sign that Americans’ view of the economy is dimming in the face of a weakening labor market and stubborn inflation.
The University of Michigan’s October sentiment index, released Friday, shows consumer confidence fell 1.5% on a monthly basis to 53.6%. The index has recovered slightly after dipping to a three-year low in April, but still remains below its January level over deepening concerns about vulnerabilities in the U.S. economy, experts note.
“The lower to median end of the income spectrum are increasingly concerned about job prospects and income prospects, and that is weighing on their morale at a time where prices are rising,” EY-Parthenon chief economist Greg Daco told CBS News prior to the index’s release. “So it’s really an affordability issue.”
The closely watched consumer sentiment index gauges Americans’ outlook on the job market, wages, inflation, business conditions and personal finances on a monthly basis.
“It’s the only piece of data that we get in the absence of how consumers are spending,” Daco noted.
Inflation expectations crept up in October, an indicator that Americans are still feeling the strain of high prices, the sentiment index shows.
“Inflation and high prices remain at the forefront of consumers’ minds,” Joanne Hsu, director of consumer surveys at the University of Michigan, said in a statement.
The government shutdown appears to have had little impact on consumers’ economic outlooks. Only about 2% spontaneously referenced the shutdown during the University of Michigan’s interviews in October, compared with the 10% of consumers in January 2019, when the government shut down for a 35-day stretch, Hsu said.
The snapshot of consumer sentiment comes after the Bureau of Labor Statistics (BLS) released the Consumer Price Index (CPI) — the first piece of federal economic data Wall Street has received since the lapse in government funding began on Oct. 1.Â
The latest CPI data shows that climbed at annual rate of 3% in September, below economists’ expectations but still above the Federal Reserve’s annual 2% target. The inflation reading will be a crucial factor in the Fed’s federal fund rate decision next week.
Alain Sherter and
Anne Marie D. Lee
