Consumer sentiment nears record low amid shutdown fears

U.S. consumer sentiment has dropped to its lowest level in over three years as fears of a prolonged government shutdown weigh heavily on Americans.

sarah

Nov 7, 2025 - 22:37

Consumer sentiment nears record low amid shutdown fears

According to a University of Michigan survey released Friday, concerns about a potential government shutdown in early November intensified, driving consumer sentiment to its lowest level in more than three years and just slightly above its all-time low.

The university's monthly Index of Consumer Sentiment registered a reading of 50.3 for the month, representing a 6.2% decline month-over-month and a nearly 30% drop from a year ago. Economists surveyed by Dow Jones had expected a reading of 53.0, following October's 53.6. Sentiment was last this low in June 2022, when inflation was near its highest level in 40 years. The November reading was the second lowest since at least 1978.

Survey director Joanne Hsu said concerns about the ongoing stalemate in Washington were paramount among consumers' fears, outweighing any boost to sentiment from new record highs in stock prices.

"With the federal government shutdown lasting more than a month, consumers are now expressing concerns about the potential negative consequences for the economy," Hsu said. "The decline in sentiment this month was widespread across the entire population, observed across all age groups, income levels, and political affiliations."

Other measures in the survey painted a similar picture.

The index of current conditions fell to 52.3, down nearly 11% from the previous month and the lowest in its history since 1951, while the index of future expectations fell to 49.0, a 2.6% decrease. On a year-over-year basis, both indices were down 18.2% and 36.3%, respectively. Elizabeth Renter, a senior economist at the consumer finance site NerdWallet, said, “Across the economy, segments of the population are increasingly dealing with difficult financial situations.” “That’s certainly true for federal employees and those who rely on the federal government for food assistance. But it’s also likely becoming increasingly true for middle-income Americans.”

Inflation expectations remained relatively contained, with longer-term outlooks declining.

The outlook for a year from now edged up slightly to 4.7%, while the five-year measure was 3.6%, down 0.3 percentage points. Because government economic data collection and release were suspended during the shutdown, measures like the Michigan Sentiment Survey became more important as alternative measures of economic progress.

Like other measures, this survey also showed some divergence across income levels and especially asset holdings. Sue said that those with the largest stock holdings actually saw an 11% improvement in sentiment.