U.S. October Michigan CSI - Lower on current conditions
October’s preliminary Michigan CSI at 46.3 is down from 48.1 and the weakest since May’s record low of 44.8. The decline was led by current conditions, which could be a warning signal for the economy.
Current conditions fell sharply to 44.4 from 49.5 and this index fell below May’s level. This could be a sign that the economy is losing momentum entering Q4 as high gasoline prices and rising interest rates have an impact, possibly on employment too.
Expectations actually increased to 47.3 from 46.3, though are still well below August’s 51.5. Equity resilience may be providing support while some may be feeling optimistic about the midterm elections.
Inflation is however a concern, with both the 1-year expectation (to 4.7% from 4.6%) and the 5-10 year view (to 3.5% from 3.4%) higher, presumably in response to gasoline prices. Both are at their highest levels since May though we do not believe the fall in the overall index is fully due to inflation concerns.
