Consumer Confidence Edges Down Over Government Shutdown Concerns and Inflation

Consumer confidence about the economy declined slightly in October, driven by Americans’ concerns over the ongoing federal government shutdown, rising inflation, and future scarcity of jobs.

The Consumer Confidence Index, a measure of U.S. consumers’ sentiments about personal finances and the economy, slipped 1 point in October, to 94.6, from an upwardly revised 95.6 the previous month, marking the lowest reading since April, the Conference Board reported on Tuesday. 

"Consumers were a bit more pessimistic about future job availability and future business conditions while optimism about future income retreated slightly," says Stephanie Guichard, senior economist for the Conference Board.

Guichard adds that consumers' write-in responses, which were mostly negative, were led by references to prices and inflation, which continued to be the main topic influencing Americans’ views of the economy.

Specifically, consumers' average 12-month inflation expectations rose to 5.9% in October, up from 5.8% in September. 

"References to U.S. politics were up notably, with the ongoing government shutdown mentioned multiple times as a key concern," notes the Conference Board economist.

Nearly 28% of surveyed consumers said they expect fewer job opportunities in the next six months, up from 25.7%—even though their appraisal of current employment availability improved for the first time since December 2024.

The future outlook for income prospects was also bleaker in October, while the share of consumers anticipating business conditions to brighten slipped from 19.3% to 19%. 

What it means for the housing market

Against this backdrop of uncertainty, purchasing plans for homes weakened for the month.

"For the housing market this fall, that lower-but-steady confidence likely means a more measured pace of decision-making," says Realtor.com® Senior Economist Anthony Smith. "Buyers are still active when the right opportunity comes along, but they’re less inclined to stretch their budgets or jump quickly."

According to Smith, this shift could lead to more price negotiations and incentives, especially at the luxury end of the housing market.

Consumers’ perceived likelihood of a recession over the next 12 months eased this month—but more respondents believed a recession had already started. 

October's dip in confidence was the sharpest among consumers under 35 years old, but those over 55 also expressed pessimism.

By income, confidence plunged for Americans making less than $75,000 a year, but improved for most of the income groups making more than that amount, with the largest surge among those earning over $200,000.

Moderation, not downturn

Smith says the latest reading from the Conference Board shows that the relative steadiness of consumer confidence in the face of the government shutdown—currently approaching the one-month mark—and persistent inflation suggests that households are adapting to the new economic environment.

"However, the longer the government shutdown persists, the greater the risk becomes, especially for those affected by furloughs," warns Smith.

For the housing market, this means that consumers are being cautious rather than discouraged, creating a market that is "cooler and more deliberate, not cold," stresses the economist

"This environment isn’t signaling a downturn, it’s signaling moderation," adds Smith. "In fact, for buyers, especially those watching for seasonal advantages, this fall still presents opportunities to secure a home on more favorable terms."