The October reading of consumer sentiment from the University of Michigan settled at 74.2. That was down marginally from the mid-month reading of 75.4 but it was down 3.5% from September which fell 13.7% from August. Consensus expectations had been for improvement to 76.0 and the latest was the lowest reading since October 1992.

During the last ten years there has been a 78% correlation between the level of consumer sentiment and the y/y change in real consumer spending.

The current conditions index fell 7.0% m/m (-12.3% y/y) for the third consecutive sharp monthly decline. Consumers' opinion of the government's economic policy fell to its lowest since 1996 and the read of personal finances fell 6.8% m/m (-14.3% y/y), a significant deterioration from the mid-month read.

Consumer expectations fell just 0.2% after two months of double digit decline. Expected personal finances fell 2.6% (-11.8% y/y) and expected business conditions during the next five years fell 5.3% (-25.8% y/y).

The mean expected inflation rate for the next twelve months was stable at 5.5% and that was a slight nudge up from the 5.4% expectation at mid-month. The mean expected rate of inflation of 3.8% during the next five to ten years is the highest since 1997.

The University of Michigan survey is not seasonally adjusted.The mid-month survey is based on telephone interviews with 250 households nationwide on personal finances and business and buying conditions. The survey is expanded to a total of 500 interviews at month end.