Inflation and high interest rates continued to put pressure on US consumer confidence fell to its lowest level since May in October

The Zhitong Finance App learned that preliminary survey data released by the University of Michigan on Friday showed that consumer confidence in the US deteriorated further in October, and consumers' evaluations of the current economic situation fell to the lowest level in history. Continued inflationary pressure, high gasoline prices, and rising borrowing costs are further straining American household budgets.

According to the data, the initial value of the US University of Michigan consumer confidence index fell to 46.3 in October, the lowest level since May this year, lower than the 47.6 expected by economists. Among them, the index measuring consumers' views on the current state of the economy fell sharply to 44.7 from 50.9 in September, the lowest level since the record was set. However, the consumer expectations index rebounded slightly from 46.3 to 47.3, the first increase since July.

In terms of inflation expectations, consumers expect prices to rise 4.7% in the next year, slightly higher than 4.6% in September; long-term inflation expectations for the next 5 to 10 years will rise to 3.5%, also slightly higher than the previous month, indicating that consumers are still cautious about future price trends.

Recently, gasoline prices have continued to be high, compounded by rising borrowing costs and a slowdown in corporate recruitment, further undermining consumer confidence. At the same time, the overall price increase in the US over the past few months has exceeded the rate of wage growth, which has squeezed the actual purchasing power of households.

Joanne Hsu, head of consumer research at the University of Michigan, said that the decline in confidence of low-income consumers and those who invest less in stocks was particularly evident this month. Judging from political tendencies, the confidence of supporters of the Democratic Party and the Republican Party improved, but this was offset by a decline in confidence among independent voters. “Despite differences, consumers of all political leanings believe that the outlook for the US economy has deteriorated compared to before the outbreak of the Iranian conflict at the beginning of this year,” Hsu said.

It is worth noting that although US consumer confidence has been at a historically low level for a long time since this year, actual consumer spending has remained relatively steady. The overall stability of the job market and strong stock market performance continue to support consumer spending in the field of goods and services.

According to the survey, consumers' evaluations of their current financial situation remained flat this month, but due to concerns about rising interest rates, consumers' evaluations of the conditions for purchasing durable goods such as automobiles and home appliances fell to the lowest level in history.

Furthermore, according to a special report on the impact of rising gasoline prices released by the University of Michigan on Friday, only about 31% of respondents expect to maintain normal consumption levels in the next year, and more than half of consumers said they would cut spending on household goods, cars, dining out, and vacations.

The consumer confidence survey covered respondents' feedback from September 22 to October 5. Overall, although US consumer spending has not weakened significantly, continuing inflation, rising energy prices, and rising financing costs are causing more and more households to consider tightening spending, and prospects for future consumption growth are still under pressure.