Consumer sentiment tumbles close to record lows in latest U Michigan
survey
[November 08, 2025] NEW
YORK (AP) — Consumer sentiment dropped to a three-year low and close to
the lowest point ever recorded by the University of Michigan one month
into the government shutdown, with pessimism over personal finances and
anticipated business conditions weighing on Americans.
The November survey showed the index of consumer sentiment at 50.4, down
a startling 6.2% from last month and it plunged nearly 30% from a year
ago.
Economists were caught off guard. Those polled had expected a slight
month-to-month increase for a reading of 54.2.
“With the federal government shutdown dragging on for over a month,
consumers are now expressing worries about potential negative
consequences for the economy," said Joanne Hsu, Surveys of Consumers
Director at University of Michigan. “This month’s decline in sentiment
was widespread throughout the population, seen across age, income, and
political affiliation.”
The one exception, Hsu said, were those with large stock holdings. Big
tech companies, particularly in artificial intelligence, have driven
explosive returns for investors. The tech-heavy Nasdaq is up 17% this
year.
“The top 20% of households by income drive 40% of consumer spending, and
we think the wealth effect from the buoyant stock market has
strengthened this year,” according to Michael Pearce, deputy chief U.S.
economist at Oxford Economics.
The nation's largest retail trade group on Thursday forecast a
trillion-dollar Christmas, with sales during November and December seen
growing up to 4.2%.
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 The UMich survey showed that
year-ahead inflation expectations inched up to 4.7% in November from
4.6% last month, and long-run inflation expectations declined to
3.6% from 3.9% last month.
James Knightley, chief international economist at
ING, said the report's key takeaway is jobs.
“Seventy-one percent of households now expect
unemployment to rise over the coming (12 months) while only 9%
expect unemployment to fall. That gives a net reading of 62%
predicting higher unemployment versus 52% last month," Knightley
said. "A huge increase which ... has historically been the prelude
to an ugly outcome for jobs.”
The first Friday of the month is typically when the government
releases its key jobs report, but all data reports are on hold
during the shutdown. Economists have turned to private sources which
are showing that job seekers are taking longer to land a job in a "
low hires, low fires " market.
At least one economist noted a change in methodology may have
impacted the survey results.
“These numbers should be taken with a grain of salt, given the
likely temporary drag on confidence from the ongoing government
shutdown, plus the Michigan survey’s switch to online rather than
phone-based sampling last year, which seems to have introduced a
structural break that produces more downbeat results," said Oliver
Allen, senior U.S. economist for Pantheon Macroeconomics.
The UMich survey was conducted before Election Day on Tuesday.
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