Consumer confidence in the U.S. has plunged to its second-lowest level on record as the ongoing federal government shutdown continues to weigh heavily on Americans’ outlook for the economy.
According to the University of Michigan’s monthly survey released Friday, the Index of Consumer Sentiment fell to 50.3 in early November — a 6.2% drop from October and roughly 30% lower than a year ago. The reading, the lowest since June 2022, is just above the all-time low recorded during that period of soaring inflation.
The report found widespread pessimism across income, age, and political groups. Survey director Joanne Hsu said that concerns about the government impasse have overtaken optimism from record stock market highs. “With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy,” she said.
The survey’s current conditions index tumbled nearly 11% to 52.3 — the lowest in its history dating to 1951 — while the expectations measure slipped to 49.0, down 2.6% from last month. Compared with a year earlier, those measures have fallen 18.2% and 36.3%, respectively.
Economists note that the impact of the shutdown extends beyond furloughed federal workers, reaching households that rely on programs such as SNAP and middle-income Americans facing tighter financial conditions. “Segments of the population are increasingly dealing with constrained budgets,” said Elizabeth Renter, senior economist at NerdWallet.
Inflation expectations showed mixed signals. The one-year outlook inched up to 4.7%, while the five-year expectation eased to 3.6%. With most federal data releases suspended during the shutdown, the Michigan survey has become one of the few available gauges of consumer and economic sentiment.
While wealthier households benefited from record stock prices — with sentiment among those with the largest holdings improving 11% — most Americans remain deeply uneasy about the government standoff and its potential to slow growth heading into the holiday season.
Source: CNBC