U of M Consumer Confidence Remains Depressed in October

The final University of Michigan consumer confidence figure for October held steady at 57.6, versus the preliminary reading of 57.5. The initial October reading dropped by the most on record (since 1978), when it fell from 70.3 in September.

The current conditions reading deteriorated slightly during October from 58.9 to 58.4, while the future expectations improved modestly to 57 from 56.7.

There was notable improvement in inflation expectations over the next year, which fell to 3.9% from 4.5%. This is the lowest reading since 3.6% back in February. The five year inflation expectations though rose to 2.9% from 2.8%.

Collapsing consumer confidence has fed directly into lower consumer spending, which is pulling down real GDP growth. The economic data does not look promising for a speedy recovery, as the financial markets remain in turmoil, and employment continues to decline. The timing of this slowdown is especially problematic for retailers as we head into the holiday season, which typically accounts for the highest percentage of annual sales. Recent reports show consumer spending falling at the fastest level in decades.