Consumer Sentiment Falls 4.4% in October

Ann Arbor, MI, October 28, 2016—Consumer sentiment fell 4.4% to 87.2, according to the final results for October 2016. September’s reading was 91.2.

October’s rate represents a 3.1% decline year-over-year.

“The Sentiment Index slipped in October to the same low recorded last September and to the lowest level since October 2014,” according to Survey of Consumers chief economist, Richard Curtin. “The October decline was due to less favorable prospects for the national economy, with half of all consumers anticipating an economic downturn sometime in the next five years for the first time since October 2014. Objectively, the probability of a downturn during the next five years is far from zero-this would be the longest expansion in 150 years if it lasted just over half of the five year horizon. Nonetheless, the October rise may simply reflect a temporary bout of uncertainty caused by the election. Prospects for renewed spending gains will depend on continued growth in jobs and wages as well as low inflation and interest rates. The small rise in interest rates now expected in December will have a minimal impact on spending. Along with small increases in interest rates, consumers also anticipate a mild slowdown in job creation that is likely to prevent any further declines in the national unemployment rate. To be sure, these changes are all anticipated to be small during the year ahead. Overall, real personal consumption expenditures can be expected to increase by 2.5% through mid 2017.”