Consumer sentiment fell slightly in October and inflation expectations remained high, signs that the economy stands to suffer from the government shutdown.

Consumer sentiment fell to 55, down from 55.1 in September, according to a preliminary reading of the University of Michigan Consumer Sentiment Index for October. Consumer sentiment is now down 22% from a year ago.

Recommended Stories

• Second round of October Social Security payments goes out in five days
• November Social Security direct payments worth $967 go out in 21 days
• Sanders plans 'robot tax' legislation to save jobs from AI

The preliminary numbers are the first to be released after the government entered a shutdown at the start of the month. Markets have largely shrugged off the shutdown, but there are still implications for the economy.

“Overall, consumers perceive very few changes in the outlook for the economy from last month,” said Joanne Hsu, the survey director. “Pocketbook issues like high prices and weakening job prospects remain at the forefront of consumers’ minds. At this time, consumers do not expect meaningful improvement in these factors.”

INTEREST PAYMENTS ECLIPSED $1 TRILLION AS FEDERAL DEFICIT HIT $1.8 TRILLION IN FISCAL 2025, CBO SAYS

The new numbers add to indications that the labor market is sputtering.

The economy added just 22,000 jobs in August, and the unemployment rate rose to 4.3%. Also, the July jobs report revealed that some 258,000 fewer jobs were added in May and June than previously reported. 

Additionally, the government announced that labor market growth for the 12 months ending in March was 911,000 jobs less than previously reported.

Not only did consumer sentiment fall this month, but long-run inflation expectations also remain high, a worrying indicator.

TRUMP TARIFFS WOULDN’T GET 30 VOTES IN SENATE, LONGTIME GOP SENATOR PHIL GRAMM SAYS

While year-ahead inflation expectations fell a tenth of a percentage point to 4.6%, long-run inflation expectations held steady at 3.7%. That is notably higher than current inflation, and might indicate consumers expect President Donald Trump’s tariff agenda to raise prices in the coming months.

Still, long-run inflation expectations are lower than the 4.4% level that was seen in April after President Donald Trump unveiled his aggressive tariff agenda.