US consumer confidence continued to decline in October, remaining at a five-month low. The final value of the University of Michigan's October Consumer Sentiment Index stood at 53.6, down 1.5 points from September, below the market expectation of 55, and reflecting a significant decrease of 24% compared to the same period last year. This index is currently 36.4% lower than the average since 1978, highlighting an extreme level of pessimism. Joanne Hsu, the survey director at the University of Michigan, stated that there was little overall change in confidence this month; while young consumers showed slight improvement, middle-aged and older groups experienced notable declines. Current personal financial conditions have seen minor improvement, but expectations for future finances have weakened. Consumers generally believe there has been no significant change in economic conditions compared to last month, with inflation and high prices remaining overwhelming sources of pressure.

Notably, despite the ongoing federal government shutdown, only around 2% of respondents mentioned the potential impact of the shutdown on the economy, far lower than the 10% observed during the 2019 shutdown. Historically, the current index level is below the corresponding levels at the onset of the last six US recessions, indicating that consumer sentiment has entered a typical pre-recessionary pessimistic zone. In October, the Current Economic Conditions Index (CECI) dropped for the fourth consecutive month to 58.6, marking a three-year low, a month-on-month decline of 3.0%, and a year-on-year drop of 9.7%, weaker than the market forecast of 61. The Consumer Expectations Index (CEI) also fell for the fourth straight month to 50.3, the lowest since May, with a month-on-month decrease of 2.7% and an alarming year-on-year contraction of 32.1%, also falling below the market expectation of 51.2.

Expectations for one-year inflation dipped from 4.7% to 4.6%. Long-term inflation expectations rose from 3.7% to 3.9%, still below the high levels seen in April of this year. The increase in long-term inflation expectations this month primarily came from Republicans and independent voters. Whether short-term or long-term, inflation uncertainty has risen across the board, indicating consumers' lack of confidence in anchoring inflation trajectories. Overall, consumer confidence continues to face pressure under high inflation, price stickiness, and policy uncertainties, with current conditions and outlook sentiments weakening in sync, pushing the index down into the typical recession zone, making economic softening signals increasingly pronounced.