US Consumer Sentiment Plummets to Near-Record Low Ahead of Midterms as Inflation Fears Mount

Independent voters’ economic anxieties underscore the political stakes of collapsing US consumer confidence.

Published On 23 Oct 202623 Oct 2026

US consumer sentiment has fallen to its second-lowest level on record in the final reading before the pivotal midterm elections, as persistent cost-of-living pressures continue to erode household confidence.

The University of Michigan’s Surveys of Consumers reported Friday that its Consumer Sentiment Index slipped to 48.0 this month from 48.1 in September. Only May’s reading of 44.8 points was lower. The decline reflects escalating tensions between the US and Iran that have driven up prices at grocery stores and petrol pumps.

The index gauges households’ views on current personal finances, expected changes over the coming year, whether now is a good time for major purchases, and their outlook for the economy over both the near term and the next five years.

“Purchasing power continues to dominate consumer views of the economy,” said Joanne Hsu, director of the Surveys of Consumers. “Sentiment is now 10 percent below a year ago and 15 percent lower than in February, just before the Iran conflict intensified.”

Political Pressure

The deterioration was driven largely by self-identified political independents, whose sentiment dropped to 42.4 points—just above the all-time low of 40.6 reached in May. Since January, the share of independents citing inflation as a financial strain has surged 27 percent. Among Republicans, that figure rose 52 percent, while Democrats saw a 15 percent increase.

Households with little or no stock market exposure—which had previously benefited from the artificial intelligence investment rally—have also reported high prices as a growing financial burden compared to the start of the year.

Long-term inflation expectations climbed to 3.5 percent over the next five years, up from 3.4 percent in September and 3.2 percent in March.

“Consumers broadly expect inflation to accelerate, and this year’s increases in inflation expectations are not limited to one part of the political spectrum,” Hsu wrote. “The fact that aggregate consumer spending has remained relatively resilient despite negative economic views warrants caution. If part of current consumption reflects precautionary spending to avoid future price hikes, disinflation may prove even more difficult to achieve.”

The souring mood coincides with elevated consumer prices. The latest consumer price index showed inflation rising 3.7 percent year-over-year, while petrol prices remain high despite recent declines. The national average for a gallon of regular gasoline stood at $4.29 ($1.13 per litre) on Friday, down from $4.47 ($1.18 per litre) a month earlier, according to AAA.

Friday’s report precedes the Federal Reserve’s final monetary policy decision before the midterms. On Wednesday, the central bank is widely expected to hold rates steady at 3.75–4.00 percent following a 25-basis-point increase in September. The CME FedWatch tool puts the probability of unchanged rates at 89.5 percent.

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