U.S. Consumer Sentiment Slips to Near-Record Lows Amid Soaring Fuel Prices

The University of Michigan’s October consumer-sentiment index fell to the second-lowest level recorded since the survey began in 1978. The index is now about 10 % lower than a year ago and 15 % below its February level, before the war with Iran intensified. Respondents cited higher gasoline and diesel costs as the primary drag on personal finances, with 56 % mentioning price pressures in the latest survey.

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Oil-supply disruptions linked to the ongoing conflict with Iran have pushed Brent crude above $116 a barrel, a 4½-year high. Consequently, regular unleaded gasoline averages $4.29 a gallon nationwide—roughly 40 % higher than a year earlier—while diesel sits near $6.32 a gallon, about 75 % above last-year levels. The price surge follows a four-year high of $4.56 per gallon recorded in May, when the war first triggered sharp supply shocks.

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• Consumer-sentiment index: second lowest since 1978 (University of Michigan).

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• Gasoline price: $4.29 per gallon, +40 % YoY.

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• Diesel price: $6.32 per gallon, +75 % YoY.

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• Year-ahead inflation expectations: 4.7 % (up from 4.6 %).

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• Long-run inflation expectations: 3.5 % (up from 3.4 %).

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• 85 % of respondents consider it a bad time to buy a home.

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Joanne Hsu, director of the University of Michigan Surveys of Consumers, highlighted that price pressures have risen for four consecutive months and that the sentiment decline spans the political spectrum, with Republicans showing the largest proportional increase in concern. Hsu also observed that consumers with modest or no stock holdings report heightened anxiety, while those with larger holdings see little change. She added that the recent rise in interest rates has further dampened home-buying sentiment.

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“There is broad consensus that escalation is coming and that it could diminish flows of oil out of the Middle East,” — Gregory Brew, senior analyst at consulting firm Eurasia Group

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