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US consumer confidence drops to second-lowest on record as gas prices jump

US consumer confidence drops to second-lowest on record as gas prices jump

Money Moves

Michigan's final October reading held at 48.0, the second-lowest on record, while the Conference Board's gauge jumped to 91.7 as gas prices eased. The Fed meets this week and voters go to the polls November 3.

2 days ago: Conference Board confidence index rises to 91.7

Overview

Updated 4 hours ago

The Conference Board's consumer confidence index rose to 91.7 in October from 84.2 in September as gasoline prices eased, beating forecasts of 81. The University of Michigan's separate survey, released October 23, held near its record low at 48.0.

Both surveys show prices still driving household gloom. The Conference Board's forward-looking gauge sits at 72.6, below the 80 level the board has said signals recession ahead. Voters go to the polls November 3, and the Fed meets this week with traders pricing an 89.5% chance of a hold.

Why it matters

Two surveys disagree on how gloomy households are, but both show prices driving the midterm vote and the Fed's next rate call.

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Key Indicators

48.0
Consumer Sentiment Index (October final)
Second-lowest since 1952, essentially flat with September's 48.1 and above the 46.3 preliminary reading.
91.7
Conference Board confidence index (October)
Up from 84.2 in September, a reading that was the lowest since April 2014; economists polled by Reuters had forecast 81.
72.6
Conference Board expectations index (October)
The forward-looking gauge rose but stays below 80, the level the board has long said typically signals a recession ahead.
42.4
Independent voters' sentiment (October)
Down from 47.7 in September and just above May's record low of 40.6; Democrats and Republicans both improved.
4.7%
Year-ahead inflation expectations
Up from 4.6% in September and 3.4% in February; the five-year outlook rose to 3.5%.
3.75%-4%
Federal funds target range
Set by the September 16 hike, the first since 2023; the FOMC meets the week of October 26 and traders price an 89.5% chance of no change.
$4.29/gal
National average gasoline price (mid-October)
Gasoline eased from September to October, the Conference Board said, though consumers still cited fuel costs as a drag.

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People Involved

Joanne Hsu
Joanne Hsu
Director, Surveys of Consumers, University of Michigan
Published the final October 2026 reading of 48.0 on October 23; said buying conditions for durable goods drove the drop in current conditions and that purchasing power still dominates how consumers see the economy
 Jerome Powell
Jerome Powell
Chair, Federal Reserve
Chairs the FOMC, which raised the federal funds rate to 3.75%-4% on September 16, 2026, the first hike since 2023; the committee meets the week of October 26, with traders pricing an 89.5% chance of a hold
FM
Fergus McCormick
Senior economist, global indicators, The Conference Board
Tied October's confidence rebound to gasoline prices easing from September to October and said write-in complaints about grocery, food and fuel costs rose

Organizations Involved

University of Michigan Surveys of Consumers
University of Michigan Surveys of Consumers
University research survey
Final October reading of 48.0, second-lowest on record behind May's 44.8; year-ahead inflation expectations rose to 4.7%

The University of Michigan's monthly household survey, in continuous operation since 1946, produces the Consumer Sentiment Index.
Board of Governors of the Federal Reserve System
Board of Governors of the Federal Reserve System
Central bank
Has kept the federal funds target range at 3.75%-4% since the September 16, 2026 hike; meets the week of October 26, with traders pricing an 89.5% chance of no change

The US central bank, whose Federal Open Market Committee sets the federal funds rate.
U.S. Bureau of Labor Statistics (BLS)
U.S. Bureau of Labor Statistics (BLS)
Federal statistical agency
Publishes CPI data showing 3.4% annual inflation in August

The federal agency that publishes the Consumer Price Index (CPI).
American Automobile Association (AAA)
American Automobile Association (AAA)
Automobile Club and Travel Organization
Source of national fuel price data

Tracks national average fuel prices, a widely cited gauge of consumer costs.
Conference Board
Conference Board
Business research organization
Reported an October consumer confidence index of 91.7, up from 84.2 in September, as gasoline prices eased

A business research group that publishes the monthly Consumer Confidence Survey and its main index.

Timeline

February 2026 October 2026

9 events Latest: 2 days ago
Tap a bar to jump to that date

  1. Conference Board confidence index rises to 91.7

    Latest Economic Data

    October's reading climbed from 84.2 in September, the lowest since April 2014, as retail gasoline prices eased. Economists polled by Reuters had forecast 81.

  2. October sentiment holds near record low at 48.0

    Economic Data

    The University of Michigan's final October index came in at 48.0, barely changed from 48.1 in September and second only to May's record low of 44.8. Year-ahead inflation expectations rose to 4.7%.

  3. Independent voters' sentiment falls to 42.4

    Economic Data

    Sentiment among self-identified independents dropped from 47.7 in September to 42.4, just above May's record low of 40.6. Scores for Democrats and Republicans improved.

  4. Final Michigan sentiment reading lands at 48.1

    Economic Data

    Final September reading came in at 48.1, up from the 47.8 preliminary but still the second-lowest since 1952. Year-ahead inflation expectations held at 4.6%.

  5. Federal Reserve raises rates to 3.75%-4%

    Central Bank

    The FOMC hiked the federal funds rate by a quarter point, the first increase since 2023, citing persistent inflation. Officials signaled another hike could come later this year.

  6. Consumer sentiment plunges to second-lowest on record

    Economic Data

    Consumer sentiment plunges to 47.8, second-lowest since 1952; year-ahead inflation expectations hit 4.6%.

  7. August CPI shows 3.4% annual inflation

    Economic Data

    August CPI shows 3.4% annual inflation; gasoline up 27.4%, fuel oil up 52% from a year ago.

  8. Consumer sentiment hits record low

    Economic Data

    Consumer sentiment hits record low in May preliminary reading.

  9. Iran conflict begins

    Geopolitical

    Iran conflict begins; energy supply disruptions push oil and fuel prices up.

Scenarios

1

Federal Reserve hikes at September meeting

Deadline passed (Sep 17, 2026)

Discussed by: Traders pricing fed funds futures; Reuters and WSJ market coverage

After the August CPI showed 3.4% annual inflation and the Michigan survey returned record-low confidence, markets put the odds of a hike at about 86%. A hike would be the first tightening move aimed at containing rising inflation expectations. If the Fed instead holds rates, it would signal tolerance of inflation above target to avoid a growth slowdown.

2

Stagflation persists through year-end

Possible Resolves by Dec 15, 2026

Discussed by: RSM economists and others tracking persistent high inflation with slow growth

If energy supply stays disrupted and the Fed's response is seen as too slow or too aggressive, inflation expectations could stay entrenched near 4.6%. That combination of high prices and weak growth keeps consumer sentiment near record lows and pressures spending into 2027.

3

Energy shock eases, confidence recovers

Uncertain Resolves by Dec 15, 2026

Discussed by: Geopolitical analysts watching the Iran conflict; energy traders

If the Iran conflict de-escalates and oil supply recovers, fuel prices would fall, easing the biggest driver of consumer pessimism. Year-ahead inflation expectations would moderate and confidence could rebound from record lows. The five-year outlook already holding steady suggests consumers see the squeeze as temporary.

4

Fed Hikes Again Before Year-End

Likely Resolves by End of 2026

Discussed by: Federal Reserve officials, per PBS News coverage of the September FOMC meeting

Officials signaled after the September 16 hike that another increase could come later this year if inflation stays elevated. Gasoline near $4.46 a gallon and year-ahead inflation expectations at 4.6% support a follow-up move.

5

Fed Holds Rates at October Meeting

Deadline passed (Oct 28, 2026)

Discussed by: Traders pricing fed funds futures via CME FedWatch, as reported by The Hill

After the September hike, key Fed officials said they were willing to wait for more data before moving again. Traders put the odds of no change at the meeting the week of October 26 at 89.5%. A hold would leave the target range at 3.75%-4% even with year-ahead inflation expectations at 4.7%.

6

Republicans lose the House on an affordability backlash

Likely Resolves by Nov 3, 2026

Discussed by: Reuters/Ipsos polling reported by Reuters; AP coverage of inflation and the midterms

Voters go to the polls November 3 with gasoline and grocery prices still high. Reuters reported its polling showed Republicans likely to lose the House and possibly the Senate, with President Donald Trump's approval at a record low after the February decision to attack Iran sent fuel prices up. Michigan's survey showed independents, a swing bloc, more pessimistic than either party's voters.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

2021-2023

2022 Inflation Surge (2021-2023)

Post-pandemic demand collided with Russia's invasion of Ukraine, sending oil and food prices soaring. CPI peaked at 9.1% in June 2022, the highest in 40 years. The Federal Reserve responded with its most aggressive tightening since the 1980s, hiking rates from near zero to over 5%.

Then

Rate hikes cooled demand, oil prices fell, and inflation dropped to roughly 3% by mid-2023. Consumer sentiment plunged to then-record lows before recovering.

Now

The episode showed the Fed could bring inflation down without a severe recession, though the process took about two years.

Why this matters now

Today's shock is also energy-driven, with diesel at records and inflation running at 3.4%. The 2022 path suggests expectations can re-anchor if supply recovers and the Fed acts credibly.

1973-1980

1973-1980 Oil Shocks and Stagflation

The 1973 OPEC oil embargo and the 1979 Iranian revolution sent energy prices soaring twice in one decade. Inflation hit double digits, and the Fed initially kept rates too low, letting inflation expectations become entrenched. Paul Volcker's hikes to nearly 20% in 1980-81 finally broke the spiral.

Then

The 1980-82 recession pushed unemployment above 10%.

Now

Inflation fell below 4% by 1983. The episode became the textbook case for why central banks must act before expectations de-anchor.

Why this matters now

The Fed now faces a parallel choice between hiking to contain rising expectations, as Volcker did, and waiting, at the risk of stagflation. The 1970s shows the cost of acting too late.

Sources

(29)
+23
Reuters Wall Street Journal Benzinga ABA Banking Journal RSM Real Economy Trading Economics Metapress University of Michigan PR Newswire CNN Business PBS News Quartz The Hill University of Michigan Institute for Social Research Seeking Alpha Axios WKOW Associated Press Reuters Siebert Reuters via Yahoo Finance CNBC Reuters Reuters Wall Street Journal Reuters The Hill Wall Street Journal Associated Press