Consumer Sentiment Drops Among Low-Income Households, High-Income Spending Remains Stable

According to the University of Michigan, the sentiment of low-income households and consumers with small stock investments has significantly worsened. A decline is also observed among politically independent voters. While there has been a slight improvement in consumer sentiment among supporters of the Democratic and Republican parties, it remains at a low level. Consumers are frustrated by rising prices and financial difficulties. 54% of respondents indicated they would reduce purchases of goods that have increased in price, while 16% stated they would stop buying them altogether. However, there are analyses suggesting that the deterioration in consumer sentiment may not lead to a sharp decline in overall consumer spending. High-income households are sustaining consumption, and those with increased assets due to a strong stock market are maintaining their spending. James Knightley, Chief International Economist at ING, analyzed that consumption can hold steady as long as the stock market maintains a solid trend. Concerns among consumers regarding rising prices are also growing, with expected inflation for the next year rising from 4.6% in September to 4.7% in October. The Federal Reserve raised the benchmark interest rate by 0.25 percentage points in September, bringing it to a range of 3.75% to 4.00%. While the likelihood of an additional increase in October has decreased, economists are anticipating a rate hike in December.

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