US consumer sentiment slips to 48.0 as interest rates hit buying plans

Americans ended October about as gloomy on the economy as they started it. The University of Michigan Consumer Sentiment Index came in at 48.0 for the month, a hair below the 48.1 reading in September.

The headline number barely moved, but the details show where the strain is. Worries about interest rates jumped, and 85% of consumers now say this is a bad time to buy a house. Worries that high prices are hurting personal finances also kept climbing, according to the University of Michigan survey.

Key facts

• The sentiment index slipped to 48.0 in October from 48.1 in September.
• That is down 10.4% from 53.6 a year earlier, in October 2025.
• Year-ahead inflation expectations rose to 4.7% from 4.6%.
• About 69% of consumers expect interest rates to rise over the next year, the highest share since April 2023.
• Some 56% said high prices are hurting their finances, up from 45% in January.

How October compares

The final number beat early expectations. Reuters reported that the preliminary October reading was 46.3, which matched the forecast of economists it polled, so the final figure came in higher.

Even so, the level is low by historical standards. Reuters reported that the 48.0 reading was the second-lowest on record, behind the all-time low of 44.8 set in May. The University of Michigan release itself does not state the record low.

Independents stood out. Reuters reported that sentiment among self-identified independents fell to 42.4 from 47.7 in September, just above their record low of 40.6 in May. Price pain has also spread across party lines. Since January, Reuters said, the share of independents saying inflation is hurting their finances rose 27%, and the share of Republicans rose 52%.

Background

The Surveys of Consumers is a rotating panel survey of a nationally representative sample of US adults. People answer online over the course of the month.

The overall index is built from two parts that moved in opposite directions this month. The Current Economic Conditions index fell to 46.7 from 50.9 in September. At the same time, the Index of Consumer Expectations rose to 48.8 from 46.3.

Surveys director Joanne Hsu tied the drop in current conditions to big-ticket shopping. Buying conditions for durable goods fell 18%, she said, and that slide pulled the current conditions measure down.

Hsu also put the month in a longer frame. She said sentiment is 15% below its February level, the month just before the Iran conflict began.

The one-tenth-point dip from September is not a meaningful change on its own. The survey says a move of 4.8 points in the sentiment index is needed to be statistically significant at the 95% level.

What it means for you

The clearest message from the survey is that borrowing costs are weighing on big plans. About 62% of consumers blamed high interest rates for poor home buying conditions, up from 47% last month.

Car shoppers feel it too. The share of people citing rate worries when talking about buying a vehicle rose to 24% from 18% in September.

Prices are the other big pressure. The share of people who said high prices are hurting their personal finances rose for a fourth month in a row, reaching 56%. Gas was a common sore spot: over 40% of respondents brought up gasoline prices without being asked.

Hsu summed up the theme in one line: "Purchasing power continues to dominate consumer views of the economy."

Inflation expectations are moving the wrong way for households. Year-ahead expectations are now 4.7%, well above the 3.4% seen in February. Long-run expectations rose to 3.5% from 3.4% in September, above their 2024 range of 2.8% to 3.2%.

The strain is not spread evenly. Consumers with no or very small stock holdings reported more concern about high prices, while those with the largest holdings reported little change since February.

Views also split by politics. Sentiment rose among Republicans and Democrats but fell among independents.

Practical steps

Since rate worries are shaping so many buying plans, the survey points to one useful habit for anyone weighing a large purchase:

1. Compare loan rates before you commit to a car, a home or another big purchase. The rise in auto shoppers citing rate concerns shows how much financing costs matter right now.
2. Watch everyday costs such as fuel. In the survey, more than 40% of people raised gas prices on their own.

What happens next

Most consumers expect borrowing to get more expensive. With 69% expecting rates to rise, people anticipate that buying conditions will keep getting worse, Hsu said.

Politics is also in the background. Reuters noted that the reading arrived ahead of the Nov. 3 midterm elections, where affordability is a central issue. It is not yet clear how worries about rates and prices will shift after the vote. The survey will keep tracking those views month by month.

FAQ

Is 48.0 a big drop?

No. It is one-tenth of a point below September, far short of the 4.8 points needed for a statistically significant change.

What are inflation expectations now?

They stand at 4.7% for the year ahead and 3.5% for the long run.

Why are people down on buying a home?

Some 85% said it is a bad time to buy a house, and about 62% pointed to high interest rates.

Do people expect interest rates to rise?

Yes. About 69% expect rates to go up in the year ahead, the highest share since April 2023.

Which part of the index fell the most?

The Current Economic Conditions index dropped to 46.7 from 50.9, led by an 18% plunge in buying conditions for durable goods.

Are high prices still a problem for households?

Yes. The share saying high prices hurt their finances rose for a fourth straight month to 56%.

Is consumer sentiment at a record low?

No. Reuters reported that October's reading was the second-lowest on record, above May's all-time low of 44.8.