U.S. consumer confidence weakened again in early October as persistent inflation pressure drove households' views of their financial situation to the worst level on record, adding a fresh worry to the outlook for the American economy.

Preliminary data released by the University of Michigan on Friday showed the October consumer sentiment index fell to 46.3, the lowest since May and below the median estimate of 47.6 in a survey of economists. The sub-index reflecting current economic conditions dropped sharply to 44.7 from 50.9 in September, the weakest reading on record.

The expectations sub-index edged up to 47.3 from 46.3 in September, its first increase since July, suggesting that some consumers have not turned uniformly more pessimistic about the economy's future direction.

Consumers' expectation for inflation over the next year rose slightly to 4.7% from 4.6% in September, far above the 3.4% recorded in February before the Iran conflict broke out and higher than any reading in 2024. The five-to-ten-year inflation expectation also climbed to 3.5% from 3.4% in September.

Meanwhile, a special survey showed that only about 31% of consumers expect to maintain normal spending over the coming year, while more than half of respondents said they would cut spending on home goods, cars, dining out and vacations.

High gasoline prices and interest rates are the core reasons

Behind the continued deterioration in consumer confidence, elevated gasoline prices, rising borrowing costs and slowing job growth are the main drivers.

High fuel prices have piled further pressure on consumers already unhappy about inflation and the rising cost of living. In recent months, overall price increases have continued to outpace wage growth, further squeezing household disposable income.

Consumers' assessment of buying conditions for durable goods fell to a record low, driven by heightened concerns about high interest rates. Still, consumers' feelings about their own current financial situation held steady this month.

Confidence among low-income groups and independents falls notably

Joanne Hsu, director of the University of Michigan survey, said in a statement that confidence fell sharply this month among low-income consumers and those with smaller stock portfolios.

Modest gains in confidence among Democratic and Republican consumers were offset by a decline in sentiment among independents.

Hsu said: "Despite differing political stances, consumers across parties agree that the economic outlook has softened compared with the start of the year."

The data cover responses collected between September 22 and October 5.

Although confidence measures have remained weak for most of this year, consumers' actual spending has stayed healthy. A steady labor market and a stock market trading at high levels have supported continued consumer spending on goods and services.