Consumer sentiment nears all-time low ahead of midterms
Consumer sentiment stands near the lowest level numerically ever recorded in the 74-year history of the University of Michigan's monthly survey, just weeks before the U.S. midterm elections.
Shopper attitudes stayed near their lowest levels in October as inflation squeezed household budgets and a global fuel supply shortage kept gasoline prices elevated, according to fresh data released on Friday.
The final reading of the University of Michigan index registered at 48.0 in October, marking the second-lowest final reading ever recorded. The reading was 48.1 in September, not significantly higher than this month's reading.
The index hit a historic low of 44.8 in May, just months after the outbreak of the Iran war.
The latest reading came as global oil prices crossed $116 a barrel on Friday, hitting a six-month high.
The average price of a gallon of gas in the U.S. is $4.29, according to AAA, amounting to a roughly 43% jump since the Iran war began in late February.
Shoppers expect inflation to rise even more over the next year, the University of Michigan consumer survey found.
Democrats and Republicans each registered improvement in consumer sentiment in October from the previous month, but it was outweighed by a decline in sentiment among independents, Surveys of Consumers director Joanne Hsu said in a statement on Friday.
Prices rose at an annual rate of 3.7% in September, the most recent month on record, federal government data showed. Inflation stands more than a percentage point higher than the Federal Reserve's target rate of 2%.
In response to rising prices, a key long-term Treasury rate has jumped in recent months as investors feared price increases would eat away at their returns. The rise in bond yields has pushed up rates for loans like credit cards and mortgages, threatening to worsen the financial crunch.
The survey arrived as affordability marks a top concern for voters ahead of early November's midterm elections.
By some measures, the economy remains robust.
Gross domestic product grew over three months ending in June, defying fear of a downturn triggered by the Iran war. Consumer spending, which accounts for about two-thirds of U.S. economic activity, surged 0.9% in August, government data last month showed.
In other areas, however, the economy has wobbled. In addition to an acceleration of price increases, hiring proved sluggish in September, the most recent month on record.
Employers added 29,000 jobs last month, a sharp slowdown from 162,000 jobs added in August, the U.S. Bureau of Labor Statistics said earlier this month. The figure came in well below economists' expectations.
