Concerns about a potential government shutdown have rattled Americans in early November, dragging consumer confidence to its weakest point in over three years. A new report from the University of Michigan, released Friday, shows that growing uncertainty about the economy and political gridlock in Washington has shaken public sentiment, bringing it closes to one of the lowest readings ever recorded in the survey’s history.
The University of Michigan’s latest data shows its Consumer Sentiment Index fell sharply to 50.3 in November, a 6.2% drop from the previous month and nearly 30% lower than the same period last year. The figure came in well below economists’ expectations of 53.0, reflecting a steep slide in public confidence. The last time sentiment dipped this low was in mid-2022, when soaring inflation reached its highest level in four decades, underscoring renewed anxieties about the nation’s economic direction.
According to survey director Joanne Hsu, the ongoing political deadlock in Washington has emerged as the biggest factor weighing on consumers’ outlook, overshadowing any optimism that might have come from the recent record-breaking performance of the stock market.
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“With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy,” Hsu said. “This month’s decline in sentiment was widespread throughout the population, seen across age, income, and political affiliation.”
Other key indicators from the survey reflected the same pessimistic outlook.
The data showed a steep decline across both short- and long-term sentiment indicators. The index tracking current economic conditions dropped to 52.3, marking an almost 11% fall from the previous month, as households reported feeling more pressure from rising costs and slowing economic activity. Meanwhile, the measure of consumer expectations for the future slipped to 49.0, down 2.6%. Compared to a year ago, both figures have seen sharp declines, with current conditions down more than 18% and future outlooks plunging over 36%, highlighting a deepening sense of financial insecurity among Americans.
Despite the broader decline in sentiment, inflation expectations remained largely stable, offering a modest point of relief. The survey noted that while consumers continue to feel the pinch of higher prices, their longer-term outlook on inflation has eased slightly, suggesting growing confidence that price pressures may gradually subside in the coming months.
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In the short term, consumers now expect inflation to rise modestly, with the one-year outlook inching up to 4.7%. However, confidence in the longer view appears to be improving, the five-year inflation expectation dipped to 3.6%, a decline of 0.3 percentage points. This suggests that while near-term price concerns persist, many Americans believe inflation will gradually cool over the next few years.
With federal agencies halting most data collection and reporting during the shutdown, private surveys such as the University of Michigan’s consumer sentiment report have taken on added importance. In the absence of regular government updates, these independent indicators are becoming crucial tools for gauging how Americans view the economy and how broader trends in spending, confidence, and inflation may be shifting in real time.
As with many economic indicators, the survey revealed a clear divide along income and wealth lines. While overall confidence declined, those with substantial stock market investments appeared more optimistic, buoyed by recent market gains. Joanne Hsu noted that sentiment among households with the highest levels of stock ownership actually rose by 11%, underscoring how financial assets continue to cushion wealthier Americans from broader economic anxieties affecting the rest of the population.