Consumer sentiment slips to 46.3, but current conditions fell 12% and 24% of lower-income households say they will stop buying

The University of Michigan's preliminary October consumer sentiment index came in at 46.3, down from 48.1 in September and 53.6 a year ago. That is a 3.7% drop on the month and 13.6% on the year. Survey director Joanne Hsu called sentiment "little changed," and on the headline number that is fair. Gold traded near its high after the release, according to Kitco.

The number behind the number

The two halves of the index moved in opposite directions, and the bigger move was the one that describes the present:

Current conditions fell 12.2% in a month and are down 23.7% from a year ago. A small rise in the expectations index offset it. Hsu said the weak spot was buying conditions for durable goods, which "plummeted amid high prices and borrowing costs." For a retailer, dealer or contractor selling big-ticket items, that is the line that matters more than the headline.

Inflation expectations rose for a second straight month: year-ahead to 4.7% from 4.6%, and long-run to 3.5% from 3.4%. Before the Iran conflict began, the year-ahead figure was 3.4%. We covered the September reading in what 4.6% inflation expectations mean for a restaurant, a furniture store and a salon.

Who actually stops buying

The same day, the survey published a special report on gasoline and spending, based on interviews from June 23 to September 21. It asked whether people would stop buying things with large price increases, cut back, or spend as usual over the next 12 months. Overall, 31% said as usual, 54% cut back and 16% stop. The split by group is wide:

The report lists food and groceries, household items including durables, car buying, eating out and vacations as the most common planned cuts. It adds that grocery shoppers are probably trading down to generics rather than cutting total food spending. These are stated intentions, not measured spending, and the survey says respondents may keep driving because they have little room to cut commuting.

What it does to two different shops

Here is an illustration, using the Michigan group figures above and an assumed customer mix. It is our arithmetic, not a survey result.

• A shop whose customers are 60% lower-income, 30% middle and 10% upper: stop = 0.6 x 24 + 0.3 x 13 + 0.1 x 9 = 19.2%; spend as usual = 0.6 x 20 + 0.3 x 32 + 0.1 x 42 = 25.8%.
• A shop with the mix reversed (10% / 30% / 60%): stop = 11.7%; spend as usual = 36.8%.

Same town, same prices, an 11-point gap in the share of customers who say they will carry on as usual. The first shop is the one most exposed to a fuel bill. Michigan cites AAA gas prices of about $2.93 a gallon before the conflict and close to $4.50 in September. The EIA's Oct. 5 reading was $4.354, down 11 cents on the week but $1.23 above a year earlier. At 15 gallons a week, going from $2.93 to $4.50 costs a commuter about $23.55 a week, or roughly $102 a month, before anything else gets pricier.

What to watch

The final October reading is due Oct. 23 at 10 a.m. ET, and September CPI follows next week. For owners, the practical read is to check your own customer base: restaurants (our data lists 605,380 independent restaurants, bars, coffee shops and bakeries), independent retailers and auto repair shops sit closest to the categories shoppers say they will trim. Days between visits, basket size and ticket mix will show a pullback before total sales do.

Sources: University of Michigan Surveys of Consumers, preliminary October 2026 results and "Gasoline Prices and Expected Consumer Spending" (Oct. 9, 2026); U.S. Energy Information Administration; Kitco; restaurant count from CheckThisBiz business data. The shop-mix percentages are Chronicle calculations using assumed customer mixes. This is market information, not investment advice.