Surging prices continue to erode purchasing power, U.S. consumer confidence remains subdued.

Preliminary survey from the University of Michigan shows the U.S. consumer confidence index has edged up roughly 6%. Multiple areas including personal financial outlooks and business environment expectations have improved, though the gains are concentrated mainly among independent voters. While confidence among low- and middle-wealth consumers has rebounded, high-wealth consumers holding large stock portfolios saw their confidence drop by 5% following recent sharp stock market volatility. Additionally, consumer comments reveal growing concerns about an AI bubble. However, compared to AI-related worries, the cost of living remains consumers’ top concern. Around 57% of respondents voluntarily noted that high prices have eroded their standard of living — the highest level since May this year, up from 46% before the Iran conflict broke out in February. Despite the recent improvement in consumer confidence, it is still 10% lower than in February. The survey was conducted between October 20 and November 2. In the two months leading up to the midterm elections, over two-thirds of consumers expect the Democratic Party to take control of the House of Representatives, and more than half of respondents also predict the Democrats will win the Senate. The one-year ahead inflation expectation fell to 4.3% this month from 4.7% last month. Though this is the lowest level since August, it remains significantly higher than the 3.4% recorded in February before the Iran conflict, and higher than all 2024 readings. Long-term inflation expectations edged down to 3.4% from 3.5% in October, but are still well above the 2.8% to 3.2% range seen in 2024.