US Consumer Sentiment Plummets Amid Ongoing Government Shutdown

The ongoing federal government shutdown has led to a significant decline in consumer sentiment across the United States. A recent survey from the University of Michigan observed a 6% drop in sentiment for November. The consumer sentiment index is now recorded at 50.3, a decrease from 53.6 in October.

Key Findings from the November Survey

This decline in consumer sentiment is notable, being nearly three points lower than the anticipated index reading of 53.0, as reported by economists in the Wall Street Journal. The last time the index hovered around this low was in June 2022, when it reached a low of 50.0 amid the inflation crisis during the Covid pandemic.

Significantly, this month’s reading marks the lowest measure since at least 1978. According to Joanne Hsu, the director of the survey, this decline is widespread, affecting consumers across various demographics, including age, income, and political affiliation.

Impact of Government Shutdown on Consumer Confidence

The survey results occur during a period of data blackout caused by the government shutdown, which has halted crucial federal reports, including the monthly jobs report. In this absence, investors are turning their attention toward alternative, privately funded research for insights.

• ADP Report: The largest payroll supplier in the U.S., ADP, indicated that private employers added 42,000 jobs in October. Although better than expectations, this reflects a marked slowdown compared to the average of 188,000 jobs from November to January.
• Job Cuts: Challenger, Gray & Christmas reported 153,074 job cuts announced by U.S.-based employers in October, a staggering 175% increase from the 55,597 cuts reported in October 2024. This represents the highest level of layoffs for any October since 2003.

Consumer Sentiment and Economic Outlook

Experts believe that dwindling consumer confidence is indicative of broader economic concerns. Alex Jacquez, Chief of Policy and Advocacy at Groundwork Collaborative, highlighted that many Americans feel they are losing ground financially. He criticized the current administration for not effectively addressing the living conditions of American families, attributing the low consumer sentiment to economic mismanagement and rising household debt.

The current sentiment levels reflect significant trepidation regarding the economic outlook amidst the ongoing shutdown, as households begin to seek leadership focused on affordability and realistic economic solutions.