Topline
Views on the U.S. economy fell to a three-year low among Americans this month as consumers expressed growing concerns about the government shutdown, according to a widely tracked survey released Friday by the University of Michigan.
Economists have warned of a divided economy in recent weeks, with high-income Americans driving consumer spending.
Getty ImagesKey Facts
Consumer sentiment—a monthly survey on Americans’ views on the economy—fell to 50.3 in November from 53.6 in October, below the historical benchmark of 100 and nearing a record low set in June 2022 (50), a reading of the University of Michigan’s study found.
A preliminary reading for November fell well below Wall Street’s projections for consumer sentiment to rise slightly to 54.2, according to FactSet.
A measurement of Americans’ views on economic conditions fell 6.3 points—a nearly 11% decline—to a record 52.3, as consumers expect prices to rise at a 3.6% annual rate over the next five to 10 years, a three-month low.
Why Are Americans Pessimistic About The Economy?
Joanne Hsu, the survey’s director, said in a statement that consumers are withstanding “pressure” on their personal finances from “multiple directions,” as Americans anticipate the job market to continue deteriorating and “expect to be personally affected.” Consumers’ expectations about losing their jobs fell to the highest reading since March, Hsu said. She noted that, as a government shutdown continues “dragging on,” consumers are “expressing worries about potential negative consequences for the economy.” The survey previously said there was “little evidence” the shutdown had impacted economic views.
What To Watch For
Whether consumer sentiment declines in updated readings later this month when the University of Michigan releases its final reading Nov. 21. In October, a preliminary reading of 55.1 fell to 53.6, the lowest since May and below analysts’ expectations to remain at 55. The Conference Board will release its own data on Americans’ views on the economic outlook on Nov. 25. The think tank previously reported its confidence index fell to 94.6 in October from 95.6 in August, the lowest reading since April, as roughly 18% of consumers said jobs were “hard to get.”
Key Background
Rising prices and unemployment have continued to disrupt Americans’ views on the economy this year, though the government shutdown has emerged as a new concern. Stephanie Guichard, a senior economist at the Conference Board, wrote last month that respondents to the think tank’s survey mentioned the government shutdown—now the longest in history—“multiple times as a key concern.” Guichard noted that consumers appeared to be “a bit more pessimistic “ about future job availability and job conditions, while Hsu said in October that Americans are “frustrated by the persistence of high prices.” The Bureau of Labor Statistics reported inflation rose 3% in September, with gas prices rising the most (4.1%) among all items tracked by the agency. It’s not immediately clear whether unemployment, last reported at 3.5% in August, has worsened, though the Federal Reserve and several economists have said they believe the labor market has cooled significantly. Private payroll processing firm ADP said Wednesday that employment in the private sector accelerated faster than expected in October as payrolls increased by 42,000. That marked a rebound from the 29,000 jobs shed in September, the largest single-month decline since March 2023.
Further ReadingForbesEconomic Confidence Hits Five-Month Low: Consumers ‘Frustrated’ With High PricesBy Ty RoushForbesInflation Rose Again Last Month, Delayed Data ShowsBy Ty Roush