US consumer sentiment hits a near-record low before midterm elections

Americans are heading into the midterm elections feeling nearly as bleak about the economy as they ever have, with a closely watched consumer survey sinking to the second-lowest reading on record.

The University of Michigan's Surveys of Consumers reported Friday that its Consumer Sentiment Index slipped to 48.0 in October, down from 48.1 in September. The all-time low came just a few months earlier, in May, at 44.8. Survey director Joanne Hsu said purchasing power "continues to dominate consumer views of the economy," adding that sentiment now sits 10 percent below a year ago and 15 percent below February, just before the conflict with Iran began.

The sharpest fall came among political independents, whose sentiment dropped to 42.4, barely above May's record low of 40.6. Since January, the share of independents saying inflation is squeezing their finances has risen 27 percent. The equivalent figure climbed 52 percent among Republicans and 15 percent among Democrats, according to the survey.

Expectations for inflation over the next five years edged up to 3.5 percent, from 3.4 percent in September and 3.2 percent in March. The latest consumer price index report put inflation at 3.7 percent year on year. A gallon of petrol averaged $4.29 on Friday, down from $4.47 a month earlier, according to data from the American Automobile Association.

The reading arrives just before the Federal Reserve's final monetary policy decision ahead of the midterms. On Wednesday, the central bank is widely expected to hold rates at 3.75 to 4.00 percent after raising them by 25 basis points in September. CME FedWatch, which tracks market expectations, puts the odds of no change at 89.5 percent.