The University of Michigan’s preliminary consumer sentiment unexpectedly fell to its lowest level since last September, and the second lowest reading in the past two years.
The index came in at 87.9 for October, below expectations of 91.8, and below September’s final reading of 91.2.
Most of the loss was concentrated among households with incomes below $75,000, noted Richard Curtin, the Surveys of Consumers chief economist. In fact, their index fell to its lowest level since August 2014.
On the flip side, upper income households’ confidence was more or less unchanged from the prior month.
“Perhaps the most concerning figure was a decline in the Expectations Index, which fell to its lowest level in the past two years, again mainly due to declines among households with incomes below $75,000,” noted Curtin. “It is likely that the uncertainty surrounding the presidential election had a negative impact, especially among lower income consumers, and without that added uncertainty, the confidence measures may not have weakened.”
“Prospects for renewed gains, other than a relief rally following the election results, would require somewhat larger wage increases and continued job growth as well as the maintenance of low inflation.”
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