Oct 23 (Reuters) – US consumer sentiment edged down to near a record low in October as rising prices because of the Middle East conflict soured households’ views of the economy on the doorstep of midterm congressional elections centering on affordability issues, a survey showed on Friday.
The University of Michigan’s Surveys of Consumers said its Consumer Sentiment Index dropped to 48.0 this month from a final reading of 48.1 in September. Economists polled by Reuters had forecast the index at 46.3, which had also been the index’s preliminary reading for October.
October’s reading marked the second-lowest on record after the all-time low of 44.8 set in May, not long after the Iran war began.
“Purchasing power continues to dominate consumer views of the economy,” said Joanne Hsu, the director of the Surveys of Consumers. “Sentiment is now 10% below a year ago and 15% less than February, just prior to the Iran conflict.”
The survey’s measure of consumer expectations for inflation over the next year nudged up to 4.7% from 4.6% in September. Twelve-month inflation expectations have surged from 3.4% in February before the US-Israeli war with Iran started.
Consumers’ expectations for inflation over the next five years rose to 3.5% from 3.4% in September.
Millions of US voters have already cast early ballots in the fast-approaching November 3 midterm election that will determine control of Congress over the final two years of President Donald Trump’s term. Polls show Republicans are likely to lose control of the House of Representatives and possibly the Senate as Trump’s approval rating in a Reuters/Ipsos poll sits at a record low thanks to the skyrocketing fuel prices unleashed by his decision to attack Iran in late February.
University of Michigan data broken down by political party affiliation showed the weaker sentiment was led by survey respondents self-identified as independents, who comprise a critical bloc of swing voters. Their sentiment score dropped to 42.4 – just above May’s record-low 40.6 – from 47.7 in September, while scores for Democrats and Republicans improved.
(Reporting by Dan Burns; Editing by Andrea Ricci)
