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U.S. Consumer Sentiment Slumps in October as Inflation Expectations Rose

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Young woman holding a grocery shopping bag showing thumb down with negative expression

U.S. consumer sentiment slipped in October from the past month, and Americans’ outlook for inflation in the upcoming year continued to surge.

Source: Surveys of Consumers

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The University of Michigan’s final sentiment index dropped to 71.7 from 72.8 in September. The figure compared with a preliminary October reading of 71.4.

Richard Curtin, director of the survey, stated that the positive impact of higher income expectations and the declining COVID-19 has been offset by higher inflation rates and dropping confidence in government economic policies.

The data suggests that despite decreasing COVID-19 infections in most US states, worries about higher prices remained a major concern. Consumers expect inflation to increase 4.8% over the next year, from 4.6% a month earlier.

Buying conditions for durable household goods decreased in October from a month earlier. The index dropped to 85 in October.

The measure of current conditions dropped to 77.7 in October from 80.1, as the measure of future expectations dropped to 67.9 from 68.1.

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