As concerns over purchasing power dominate, consumer sentiment moves sideways
October 23, 2026
ANN ARBOR—Consumer sentiment held steady this month, registering just a scant one-tenth of an index point below September, according to the University of Michigan Surveys of Consumers.
Increases in sentiment this month among Republicans and Democrats were balanced by declines among independents. While year-ahead business conditions improved about 14%, they stand 16% less than last October’s read.
“This month’s decline in the Current Conditions subindex was driven entirely by buying conditions for durable goods, which plunged 18% on the basis of higher interest rates and rising concerns about the affordability of such purchases,” said U-M economist Joanne Hsu, director of the surveys. “Purchasing power continues to dominate consumer views of the economy. Sentiment is now 10% below a year ago and 15% below February, just prior to the Iran conflict.”
Interest rates weigh down buying conditions for major purchases
Consumers have already taken note of recent increases in interest rates, Hsu said. Homebuying conditions plummeted, with 85% of consumers indicating that it is a bad time to buy a house.
About 62% blamed high interest rates, up from 47% last month. Price concerns moderated slightly but remain pervasive, mentioned by 42% of consumers, down from 47% two months ago.
For auto buying conditions, interest rate concerns increased from 18% in September to 24% this month.
“At the same time, there was little change in mentions of interest rates in a personal finance context,” Hsu said. “Also, about 69% of consumers expect interest rates to rise in the year ahead, the highest since April 2023, suggesting that consumers anticipate further deterioration in buying conditions.”
Widespread increase in concerns over high prices, particularly among lower-wealth consumers
Frustration over high prices eroding consumers’ living standards continues to mount, Hsu said. The share of consumers that spontaneously mentioned that high prices are dragging down their personal finances increased for the fourth straight month to 56% this month, compared with 45% in January of this year.
“These increases are seen across the political spectrum, with Republicans exhibiting the largest proportional rise,” Hsu said. “Similarly, consumers with no stock holdings or very small holdings also report increased concerns over the effect of high prices on their personal finances over the course of the year.”
In contrast, consumers with the largest stock holdings, she said, report little change in the burden of high prices since February, reflecting the fact that their financial wealth enables this group to maintain their living standards in spite of higher costs.
Gasoline prices remain highly salient, mentioned unprompted by over 40% of respondents.
Consumer Sentiment Index
The Consumer Sentiment Index fell to 48.0 in the October 2026 survey, down from 48.1 in September and below last October’s 53.6. The Current Index fell to 46.7, down from 50.9 in September and below last October’s 58.6. The Expectations Index rose to 48.8, up from 46.3 in September and below last October’s 50.3.
About the surveys
The Surveys of Consumers is a rotating panel survey at the University of Michigan Institute for Social Research. It is based on a nationally representative sample that gives each household in the coterminous U.S. an equal probability of being selected. Interviews are conducted throughout the month by web. The minimum monthly change required for significance at the 95% level in the Sentiment Index is 4.8 points; for the Current Economic Conditions Index and Index of Consumer Expectations, the minimum is 6 points.
About ISR
Established in 1949, the Institute for Social Research at the University of Michigan is among the world’s oldest social science research organizations and a world leader in the development and application of social science methodology. ISR conducts some of the most widely cited surveys and studies in the nation, including the University of Michigan Surveys of Consumers, American National Election Studies, Monitoring the Future Study, Panel Study of Income Dynamics, Health and Retirement Study, National Survey of Black Americans and World Values Survey. ISR is also home to the Inter-University Consortium for Political and Social Research, which maintains the world’s largest computerized social science data archive.
Contact: Fernanda Pires, [email protected]
U-M Surveys of Consumers, 734-763-5224