Consumer confidence hit a six-month low as economic turbulence and political gridlock weighed on sentiment
United States consumer confidence slipped to its lowest level since April, as the ongoing government shutdown and persistent inflation concerns rattled Americans’ outlook on the economy and jobs.
The Conference Board’s consumer confidence index fell to 94.6 in October, down from an upwardly revised 95.6 in September, according to data released Tuesday. The drop was driven by a gloomier view of future economic conditions, even as perceptions of current conditions improved slightly.
“The longer [the shutdown] persists, the more likely it is that confidence will continue to decline, as federal workers and private government contractors go without pay,” said Grace Zwemmer, associate US economist at Oxford Economics.
She pointed to the risk of a $140 billion annualized negative income shock if the shutdown drags on, with spillover effects already hitting the private sector.
Job market anxieties remained front and center. While consumers’ perception of job availability improved marginally, the labor-market differential—a leading indicator for unemployment—remained near its lowest point since early 2021, at 9.4.
“The labor-market differential continues to suggest the unemployment rate will rise from here,” Zwemmer said. Oxford Economics expects unemployment to edge up to 4.4% by year-end, with recent layoff activity picking up in October.
LeeCoye “LC” Parker of C2 Financial highlighted the toll of the government shutdown on rural borrowers, noting that frozen USDA loans are stalling deals and delaying homeownership for first-time buyers. https://t.co/ToymmXVFVv
— Mortgage Professional America Magazine (@MPAMagazineUS) October 28, 2025
Inflation expectations also ticked higher, with year-ahead forecasts rising to 5.9% amid new sectoral tariffs on goods like furniture and pharmaceuticals. However, Zwemmer noted, “We expect the impact of these new tariffs on inflation will be minimal.”
The Conference Board’s survey found that references to prices and inflation remained the dominant concern among consumers, while mentions of tariffs, though declining, stayed elevated.
The data highlighted a widening divide between high- and low-income households. Confidence fell for those earning less than $75,000, while it rose for those making over $200,000, reinforcing what economists describe as a K-shaped recovery.
Looking ahead, analysts expect that tax cuts, lower interest rates, and a fading negative wealth shock could help sustain consumption growth in 2026, even as confidence remains subdued.
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