Consumer Sentiment Drops 3.6% in Early October

Ann Arbor, MI, October 17, 2016—Consumer sentiment fell to 87.9 in early October, a 3.6% drop from September’s 91.2, according to preliminary results from the University of Michigan’s Survey of Consumers.

In October 2015, consumer sentiment was 90.0.

“The Sentiment Index slipped in early October to its lowest level since last September and the second lowest level in the past two years,” said Richard Curtin, Survey of Consumers’ chief economist. “The early October loss was concentrated among households with incomes below $75,000, whose Index fell to its lowest level since August of 2014. In contrast, confidence among upper income households remained unchanged in early October from last month, and more importantly, at a level that was nearly identical to its average in the prior twenty-four months (98.3 vs. 98.2). 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. 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. Overall, real personal consumption can be expected to increase by 2.5% through mid 2017.”