Like the vital signs of a patient not measurably worse but whose condition fails to improve, the decline in both of the nation’s most important measures of consumer sentiment slowed in October, but the trend toward weakness continued. The Conference Board said its Consumer Confidence Index “inched down” a single point, to 94.6, from an upwardly revised 95.6 in September, and the University of Michigan said its Consumer Sentiment Index slipped “a scant” 1.5 points, to 53.6, from 55.1.
Within the Conference Board’s overall index, its Present Situation Index, which measures consumers’ assessment of current business and economic conditions, rose 1.8 points, to 129.3, while a measure known as the Expectations Index, which is based on consumers’ short-term outlook for income, business and labor market conditions, fell 2.9 points, to 71.5.
The Conference Board said that when the expectations gauge falls below 80, it typically signals that a recession is looming. That index has been below 80 since February. “Consumer confidence moved sideways in October, only declining slightly from its upwardly revised September level,” Stephanie Guichard, senior economist, global indicators, at The Conference Board, stated in a press release.
“Changes to the individual subcomponents were also limited and largely canceled each other out. The Present Situation Index regained some strength after September’s drop. Consumers’ view of current business conditions inched upward, while their appraisal of current job availability improved for the first time since December 2024.
“On the other hand, all three components of the Expectations Index weakened somewhat,” she added. “Consumers were a bit more pessimistic about future job availability and future business conditions, while optimism about future income retreated slightly.”
The think tank said confidence declined for people younger than 35 and, to a lesser extent, for people older than 55. It fell for people with income of less than $75,000 a year but was higher for most people who make more than that. Among political independents, confidence was higher; it was lower for Democrats and, to a lesser extent, for Republicans.
“Consumers’ write-in responses were led by references to prices and inflation, which continued to be the main topic influencing consumers’ views of the economy,” Guichard said. “References to tariffs declined further [in October] but remained elevated. Mentions of jobs and employment eased somewhat after picking up in September. The write-in comments remained mostly negative overall, but less so than in previous months. References to U.S. politics were up notably, with the ongoing government shutdown mentioned multiple times as a key concern.”
The Conference Board said consumers’ views of their family’s current and future financial situation did improve in October, and their plans for buying big-ticket items were “little changed overall.”
The University of Michigan said a modest improvement in sentiment among younger consumers was offset by declines for middle-aged and older people. “Current personal finances inched up, while expected personal finances receded,” Joanne Hsu, director of the university’s Surveys of Consumers, stated in a press release. “Overall, consumers perceive few material changes in economic circumstances from [September]; inflation and high prices remain at the forefront of consumers’ minds.
“There was little evidence [in October] that consumers connect the federal government shutdown to the economy,” Hsu added. “Only about 2% spontaneously referenced the shutdown during [October’s] interviews, compared with the 10% of consumers who did so in January 2019 during that 35-day shutdown.”
Hsu said year-ahead inflation expectations declined from 4.7% in September to 4.6% in October. “These expectations are currently midway between the readings seen a year ago and the highs seen this year in May in the wake of the initial announcements of major tariff changes,” she said.
Amid the federal government shutdown, several measures of the U.S. economy were not published in October. The Conference Board did not release its Leading Economic Index, and the Commerce Department did not issue its Personal Consumption Expenditures Price Index — the Federal Reserve’s preferred measure of inflation — or report on consumer spending and personal income. The available inflation barometer, the Consumer Price Index, showed that prices rose again in September but slightly less than economists expected.
The CPI rose 0.3% after a 0.4% increase the previous month. During the 12-month period through September, the CPI rose 3%; the advance in August was slightly lower, at 2.9%. Core CPI, which strips out the volatile food and energy components, rose 0.2% after climbing 0.3% the previous month.
The mood at small businesses darkened in September. The National Federation of Independent Business said its Small Business Optimism Index declined 2 points, to 98.8. The drop was the first for the index in three months, but the measure remained above the survey’s 52-year average of 98. Adding to the distress was that the federation’s Uncertainty Index climbed 7 points, to 100 — its fourth-highest reading in more than 51 years.
“Optimism among small business owners decreased in September,” NFIB chief economist Bill Dunkelberg stated in a press release. “While most owners evaluate their own business as currently healthy, they are having to manage rising inflationary pressures, slower sales expectations and ongoing labor-market challenges. Although uncertainty is high, small business owners remain resilient as they seek to better understand how policy changes will impact their operations.”
Eighteen percent of member business owners named labor quality as their most important problem, and an equal percentage cited taxes. Fourteen percent said inflation topped their list of troubles. NFIB said the net percentage of member owners who expect the economy to improve in the coming months fell 11%, to 23%. A seasonally adjusted 32% of member owners reported job openings they could not fill, a percentage that was unchanged from August. A net 31% reported raising pay during the month, up 2% from the previous month.
Confidence among the nation’s home builders improved in October. The National Association of Home Builders said its NAHB/Wells Fargo Housing Market Index rose 5 points, to 37 — the best reading since April. Builder sentiment has now been in what NAHB calls negative territory — an index number below 50 — for 18 months, but the trade group’s measure of future sales expectations climbed above that mark for the first time since January.
“While recent declines for mortgage rates are an encouraging sign for affordability conditions, the market remains challenging,” NAHB chairman Buddy Hughes, a home builder and developer from Lexington, N.C., stated in a press release. “The housing market has some areas with firm demand, including smaller builders shifting to remodeling and ongoing solid conditions for the luxury market. However, most home buyers are still on the sidelines waiting for mortgage rates to move lower.”
“The HMI gain in October is a positive signal for 2026, as our forecast is for single-family housing starts to gain ground next year,” NAHB chief economist Robert Dietz added in a press release. “The 30-year, fixed-rate mortgage fell from just above 6.5% at the start of September to 6.3% in early October. Combined with anticipated further easing by the Fed, builders expect a slightly improving sales environment, albeit one in which persistent supply-side cost factors remain a challenge.”
The latest NAHB survey also showed that 38% of builders reported cutting prices in September. The percentage of builders doing so has been in a range of 37% to 39% since June.
All three of the HMI’s sub-indexes rose in October. The component that measures current sales conditions climbed 4 points, to 38; the index that gauges future sales jumped 9 points, to 54; and the measure that charts the traffic of prospective buyers rose 4 points, to 25. Any number over 50 indicates that more builders view conditions as good than poor.
Data on new-home sales from the Commerce Department for September were not available because of the government shutdown. Existing-home sales rose 1.5% to a seasonally adjusted annual rate of 4.06 million during the month, according to figures supplied by the National Association of Realtors.
“As anticipated, falling mortgage rates are lifting home sales,” NAR chief economist Lawrence Yun stated in a press release. “Improving housing affordability is also contributing to the increase in sales.
“Inventory is matching a five-year high, though it remains below pre-Covid levels,” Yun added. “Many homeowners are financially comfortable, resulting in very few distressed properties and forced sales. Home prices continue to rise in most parts of the country, further contributing to overall household wealth.”
NAR said the median existing-home sales price in September was $415,200, up 2.1% from the same month a year earlier. It was the 27th consecutive month of year-over-year price increases.
