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US consumer confidence drops to second-lowest on record as gas prices jump

US consumer confidence drops to second-lowest on record as gas prices jump

Money Moves Interactive

October inflation stayed hot, with core prices up 0.3% for a third month, as gas fell below $4. The Fed next meets December 8-9, and Democrats won sweeping midterm victories.

2 days ago: October CPI rises 0.4%, core up 0.3%

Overview

Updated 2 days ago

Consumer prices rose 0.4% in October from September, and core prices rose 0.3% for a third straight month, the Labor Department said November 10. The report kept the Federal Reserve on course to raise rates at its December 8-9 meeting. Governor Christopher Waller said a 0.3% core reading would make him consider a half-point hike.

Gasoline fell below $4 a gallon for the first time in three months, to $3.98, AAA said. Democrats won sweeping midterm victories last week as inflation and prices dominated the campaign. The University of Michigan's October sentiment reading stayed at 48.0, the second-lowest on record.

Why it matters

Hot inflation and a possible half-point Fed hike in December keep the squeeze on household budgets after Democrats' midterm wins.

A hundred Decembers

Traders give a December Fed rate hike about 96 chances in 100

One dot per run of the Fed's Dec 8-9 decision, at Polymarket's prices the day October's inflation data came out. One in nine: a hike of half a point or more.

At these odds, 85 of 100 runs end in Raise 0.25 pt.

0
Cut 0.5 pt or more
odds 0.25%
0
Cut 0.25 pt
odds 0.35%
4
Hold
odds 3.55%
85
Raise 0.25 pt
odds 85.5%
11
Raise 0.5 pt or more
odds 10.95%
The dots now are the odds, rounded to 100 runs. Each tap draws a new random 100.
Traders give a December Fed rate hike about 96 chances in 100
OutcomeChanceRuns of 100NoteSource
Cut 0.5 pt or more0.25%0Polymarket: Fed Decision in December?
Cut 0.25 pt0.35%0Polymarket: Fed Decision in December?
Hold3.55%4Polymarket: Fed Decision in December?
Raise 0.25 pt85.5%85The favourite: a quarter-point rise in the top of the target rangePolymarket: Fed Decision in December?
Raise 0.5 pt or more10.95%11Polymarket: Fed Decision in December?

As of 2026-11-10. Polymarket 'Fed Decision in December?' Yes prices (bid-ask midpoint), read 2026-11-10 5:04 PM ET; $24.8M traded. Resolves on the change in the top of the fed funds target range at the Dec 8-9, 2026 FOMC meeting. Prices add to 100.6%; dots scaled to 100. Sources: Polymarket: Fed Decision in December?.

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Key Indicators

48.0
Consumer Sentiment Index (October final)
Second-lowest since 1952, essentially flat with September's 48.1 and above the 46.3 preliminary reading.
91.7
Conference Board confidence index (October)
Up from 84.2 in September, a reading that was the lowest since April 2014; economists polled by Reuters had forecast 81.
72.6
Conference Board expectations index (October)
The forward-looking gauge rose but stays below 80, the level the board has long said typically signals a recession ahead.
42.4
Independent voters' sentiment (October)
Down from 47.7 in September and just above May's record low of 40.6; Democrats and Republicans both improved.
4.7%
Year-ahead inflation expectations
Up from 4.6% in September and 3.4% in February; the five-year outlook rose to 3.5%.
3.75%-4%
Federal funds target range
The Fed's target range ahead of its December 8-9 meeting; traders see a quarter-point hike as all but certain and a half-point move as about 15% likely.
$3.98/gal
National average gasoline price (November 10)
Regular gas fell below $4 for the first time in three months, down 38 cents in a month, AAA said.
0.4%
October CPI (monthly)
Consumer prices rose 0.4% from September; core prices excluding food and energy rose 0.3% for a third straight month. No annual rate was published because of the 2025 shutdown.

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People Involved

Joanne Hsu
Joanne Hsu
Director, Surveys of Consumers, University of Michigan
Published the final October 2026 reading of 48.0 on October 23; said buying conditions for durable goods drove the drop in current conditions and that purchasing power still dominates how consumers see the economy
 Jerome Powell
Jerome Powell
Chair, Federal Reserve
Chairs the FOMC, which has kept the federal funds target range at 3.75%-4% ahead of its December 8-9 meeting; traders see a quarter-point hike as all but certain and a half-point move as possible
 Fergus McCormick
Fergus McCormick
Senior economist, global indicators, The Conference Board
Tied October's confidence rebound to gasoline prices easing from September to October and said write-in complaints about grocery, food and fuel costs rose
CW
Christopher Waller
Governor, Federal Reserve Board
Said on November 10 that a 0.3% core CPI reading would make him consider a half-point rate hike at the December 8-9 meeting
 Lorie K. Logan
Lorie K. Logan
President, Federal Reserve Bank of Dallas
Said on November 10 that the Fed needs to raise rates at least half a percentage point before pausing

Organizations Involved

University of Michigan Surveys of Consumers
University of Michigan Surveys of Consumers
University research survey
Final October reading of 48.0, second-lowest on record behind May's 44.8; year-ahead inflation expectations rose to 4.7%

The University of Michigan's monthly household survey, in continuous operation since 1946, produces the Consumer Sentiment Index.
Board of Governors of the Federal Reserve System
Board of Governors of the Federal Reserve System
Central bank
Has kept the federal funds target range at 3.75%-4% ahead of its December 8-9 meeting; traders see a quarter-point hike as all but certain and a half-point move as possible

The US central bank, whose Federal Open Market Committee sets the federal funds rate.
U.S. Bureau of Labor Statistics (BLS)
U.S. Bureau of Labor Statistics (BLS)
Federal statistical agency
Published October CPI on November 10 showing a 0.4% monthly rise and 0.3% core inflation; no annual rate because last year's shutdown left no October 2025 base

The federal agency that publishes the Consumer Price Index (CPI).
American Automobile Association (AAA)
American Automobile Association (AAA)
Automobile Club and Travel Organization
Reported the national average for regular gasoline fell below $4 to $3.98 on November 10, down 38 cents in a month; diesel averaged $6.15

Tracks national average fuel prices, a widely cited gauge of consumer costs.
Conference Board
Conference Board
Business research organization
Reported an October consumer confidence index of 91.7, up from 84.2 in September, as gasoline prices eased

A business research group that publishes the monthly Consumer Confidence Survey and its main index.

Timeline

February 2026 November 2026

13 events Latest: 2 days ago Showing 8 of 13
Tap a bar to jump to that date

  1. October CPI rises 0.4%, core up 0.3%

    Latest Economic Data

    Consumer prices rose 0.4% from September, and core prices excluding food and energy rose 0.3% for a third straight month. The BLS did not publish an annual rate because last year's shutdown left no October 2025 base.

  2. Gasoline falls below $4 a gallon

    Economic Data

    The national average for regular gas dropped to $3.98, down 38 cents in a month, AAA said. It was the first time below $4 in three months but still about a dollar above the level when the US went to war with Iran.

  3. Fed officials open door to half-point December hike

    Central Bank

    Governor Christopher Waller said a 0.3% core CPI reading would make him consider a half-point hike at the December 8-9 meeting. Dallas Fed President Lorie Logan said the Fed needs at least a half-point before pausing.

  4. Democrats win sweeping midterm victories

    Election

    Democrats won sweeping victories in the midterm elections, the Associated Press reported, as inflation and prices dominated the campaign.

  5. Conference Board confidence index rises to 91.7

    Economic Data

    October's reading climbed from 84.2 in September, the lowest since April 2014, as retail gasoline prices eased. Economists polled by Reuters had forecast 81.

  6. October sentiment holds near record low at 48.0

    Economic Data

    The University of Michigan's final October index came in at 48.0, barely changed from 48.1 in September and second only to May's record low of 44.8. Year-ahead inflation expectations rose to 4.7%.

  7. Independent voters' sentiment falls to 42.4

    Economic Data

    Sentiment among self-identified independents dropped from 47.7 in September to 42.4, just above May's record low of 40.6. Scores for Democrats and Republicans improved.

  8. Final Michigan sentiment reading lands at 48.1

    Economic Data

    Final September reading came in at 48.1, up from the 47.8 preliminary but still the second-lowest since 1952. Year-ahead inflation expectations held at 4.6%.

  9. Federal Reserve raises rates to 3.75%-4%

    Central Bank

    The FOMC hiked the federal funds rate by a quarter point, the first increase since 2023, citing persistent inflation. Officials signaled another hike could come later this year.

  10. Consumer sentiment plunges to second-lowest on record

    Economic Data

    Consumer sentiment plunges to 47.8, second-lowest since 1952; year-ahead inflation expectations hit 4.6%.

  11. August CPI shows 3.4% annual inflation

    Economic Data

    August CPI shows 3.4% annual inflation; gasoline up 27.4%, fuel oil up 52% from a year ago.

  12. Consumer sentiment hits record low

    Economic Data

    Consumer sentiment hits record low in May preliminary reading.

  13. Iran conflict begins

    Geopolitical

    Iran conflict begins; energy supply disruptions push oil and fuel prices up.

Scenarios

1

Federal Reserve hikes at September meeting

Deadline passed (Sep 17, 2026)

Discussed by: Traders pricing fed funds futures; Reuters and WSJ market coverage

After the August CPI showed 3.4% annual inflation and the Michigan survey returned record-low confidence, markets put the odds of a hike at about 86%. A hike would be the first tightening move aimed at containing rising inflation expectations. If the Fed instead holds rates, it would signal tolerance of inflation above target to avoid a growth slowdown.

2

Stagflation persists through year-end

Possible Resolves by Dec 15, 2026

Discussed by: RSM economists and others tracking persistent high inflation with slow growth

If energy supply stays disrupted and the Fed's response is seen as too slow or too aggressive, inflation expectations could stay entrenched near 4.6%. That combination of high prices and weak growth keeps consumer sentiment near record lows and pressures spending into 2027.

3

Energy shock eases, confidence recovers

Uncertain Resolves by Dec 15, 2026

Discussed by: Geopolitical analysts watching the Iran conflict; energy traders

If the Iran conflict de-escalates and oil supply recovers, fuel prices would fall, easing the biggest driver of consumer pessimism. Year-ahead inflation expectations would moderate and confidence could rebound from record lows. The five-year outlook already holding steady suggests consumers see the squeeze as temporary.

4

Fed Hikes Again Before Year-End

Likely Resolves by End of 2026

Discussed by: Federal Reserve officials, per PBS News coverage of the September FOMC meeting

Officials signaled after the September 16 hike that another increase could come later this year if inflation stays elevated. October core CPI rose 0.3% for a third month, and traders see a quarter-point hike at the December 8-9 meeting as all but certain.

5

Fed Holds Rates at October Meeting

Deadline passed (Oct 28, 2026)

Discussed by: Traders pricing fed funds futures via CME FedWatch, as reported by The Hill

The Fed left its target range at 3.75%-4% at its late-October meeting, as traders expected. The next meeting is December 8-9, where a quarter-point hike is seen as all but certain.

6

Republicans lose the House on an affordability backlash

Deadline passed (Nov 3, 2026)

Discussed by: Reuters/Ipsos polling reported by Reuters; AP coverage of inflation and the midterms

Democrats won sweeping midterm victories on November 3, the Associated Press reported, as inflation and prices dominated the campaign. Michigan's survey showed independents more pessimistic than either party's voters.

7

Fed raises rates by half a point in December

Possible Resolves by Dec 9, 2026

Discussed by: Federal Reserve Governor Christopher Waller, Dallas Fed President Lorie Logan and traders pricing fed funds futures

Waller said a 0.3% core CPI reading would make him consider a half-point move at the December 8-9 meeting. Logan said the Fed needs at least a half-point before pausing. Market odds of a half-point move were near 15% on November 10.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

2021-2023

2022 Inflation Surge (2021-2023)

Post-pandemic demand collided with Russia's invasion of Ukraine, sending oil and food prices soaring. CPI peaked at 9.1% in June 2022, the highest in 40 years. The Federal Reserve responded with its most aggressive tightening since the 1980s, hiking rates from near zero to over 5%.

Then

Rate hikes cooled demand, oil prices fell, and inflation dropped to roughly 3% by mid-2023. Consumer sentiment plunged to then-record lows before recovering.

Now

The episode showed the Fed could bring inflation down without a severe recession, though the process took about two years.

Why this matters now

Today's shock is also energy-driven, with diesel at records and inflation running at 3.4%. The 2022 path suggests expectations can re-anchor if supply recovers and the Fed acts credibly.

1973-1980

1973-1980 Oil Shocks and Stagflation

The 1973 OPEC oil embargo and the 1979 Iranian revolution sent energy prices soaring twice in one decade. Inflation hit double digits, and the Fed initially kept rates too low, letting inflation expectations become entrenched. Paul Volcker's hikes to nearly 20% in 1980-81 finally broke the spiral.

Then

The 1980-82 recession pushed unemployment above 10%.

Now

Inflation fell below 4% by 1983. The episode became the textbook case for why central banks must act before expectations de-anchor.

Why this matters now

The Fed now faces a parallel choice between hiking to contain rising expectations, as Volcker did, and waiting, at the risk of stagflation. The 1970s shows the cost of acting too late.

Sources

(35)
+29
Reuters Wall Street Journal Benzinga ABA Banking Journal RSM Real Economy Trading Economics Metapress University of Michigan PR Newswire CNN Business PBS News Quartz The Hill University of Michigan Institute for Social Research Seeking Alpha Axios WKOW Associated Press Reuters Siebert Reuters via Yahoo Finance CNBC Reuters via Investing.com NPR Reuters Reuters Wall Street Journal Reuters The Hill Wall Street Journal Associated Press Reuters via Investing.com Associated Press CNBC Axios