Weak consumer sentiment turns into lower spending on home improvement and electronics, hurting retailers that sell delayed purchases

June 2022's reading of 50.0 was the record low for the University of Michigan sentiment index at the time, when gasoline passed $5 a gallon and inflation neared 9%. That record was broken in May 2026, when the index fell to 44.8, the lowest since the survey began in 1952. September's 48.1 was the second-lowest ever. The preliminary October 2026 index of 46.3 and September's 48.1 are both below the June 2022 reading. In mid-2022, Target and Walmart cut their profit forecasts as inventories piled up and shoppers shifted toward staples.

Sentiment surveys have often been gloomy while people kept spending, and unemployment of 4.2% with low jobless claims suggests incomes are holding up. Even after sentiment hit a record low in May, Home Depot grew revenue 6% and Best Buy 4% in the quarter ended July 31. Their rises the trading day before October 9 show investors were not convinced of a pullback, and a gloomy reading driven by gasoline and price worries may fade if fuel costs ease, as it did in June and July.