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US consumer sentiment near record low as frustration over economy mounts
Reuters • • business
Key Points:
- US consumer sentiment declined sharply in early October, driven by rising living costs linked to the Middle East conflict, further dampening economic outlook ahead of the November midterm elections.
- The University of Michigan's Consumer Sentiment Index fell to 46.3, close to a record low, with significant drops among lower-income consumers and Independents, despite slight improvements among Democrats and Republicans.
- Inflation concerns persist, with consumers' one-year inflation expectations rising to 4.7%, influenced by higher energy prices and increased borrowing costs following the Federal Reserve's recent interest rate hike.
- Consumer spending remains supported primarily by higher-income households benefiting from strong stock market performance, while middle- and lower-income groups face financial strain and are cutting back on purchases.
- The Federal Reserve raised interest rates in September for the first time in three years and may consider further hikes, though recent weaker payroll data and inflation readings have reduced the likelihood of an immediate increase.
