Key Takeaways
\nThe University of Michigan Consumer Sentiment Index fell to 50.3 in November, the lowest level since June 2022, while its survey results on current economic conditions were at the lowest point in the report\u2019s 73-year history.While consumers had previously brushed off the government shutdown, this month\u2019s results showed that the budget battle was weighing more heavily on people\u2019s perception of the economy.\u00a0<\/p>\n
Consumers have been relatively unfazed by the U.S. government shutdown up until now, a closely watched survey revealed Friday.\n<\/p>\n
The Michigan Consumer Sentiment Index fell to 50.3 in the preliminary reading for November, a low\u00a0not seen since June 2022<\/a>, when Americans were reeling from runaway inflation. Economists surveyed by The Wall Street Journal and Dow Jones Newswires were expecting a slight drop in the sentiment index from last month\u2019s reading of 53.6.\n<\/p>\n Moreover, consumers\u2019 assessment of current economic conditions was the lowest in the 73-year history of the survey conducted by the University of Michigan. The index is based on consumers\u2019 opinions on both the current economy and on their expectations of future economic conditions.\n<\/p>\n Why This Matters for Consumers<\/p>\n Consumer sentiment can serve as a key indicator of the economy’s direction. People who are worried about prices, their jobs, or other conditions can react by reducing their spending or taking other actions that slow down economic growth.<\/p>\n While inflation worries persisted, the survey showed that the current government shutdown is also weighing on people\u2019s perceptions of the economy. Survey results from early October showed that the shutdown hadn\u2019t yet registered with the consumers<\/a>. The preliminary survey concluded before this Tuesday\u2019s election, which saw Democrats win several state and local races.\u00a0\n<\/p>\n \u201cWith the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy,\u201d Survey Director Joanne Hsu said in a release.\u00a0\n<\/p>\n Sentiment Decline Widespread, With Only Large Stock Owners Seeing Improvements <\/p>\n The decline in sentiment was widespread over age groups, income levels, and political affiliation, Hsu said. The only group to show improvement was large stockholders, who have watched a series of new market highs<\/a> over the survey period.\u00a0\n<\/p>\n The survey results come as the government shutdown enters its 38th day. Funding for most government agencies and programs expired on Oct. 1 when congressional Republicans and Democrats couldn\u2019t reach an agreement on how to fund the government.\u00a0\n<\/p>\n So far, one of the main consequences of the shutdown has been a freeze on government economic data<\/a>, since the workers who conduct the information gathering aren\u2019t at work.\n<\/p>\n But more areas of the economy are starting to be affected, including air travel, as weak staffing levels for unpaid air traffic controllers prompted officials to reduce air traffic by 10%<\/a> at 40 airports. The shutdown is also threatening the delivery of food assistance payments<\/a>.\n<\/p>\n