American consumer confidence has tumbled to a near historic low, driven by a prolonged federal government shutdown that is now stretching into its second month.
Sharp Decline in Consumer Confidence
The University of Michigan's closely watched monthly survey revealed a stark drop in consumer sentiment for November. The consumer sentiment index fell to 50.3, down from 53.6 in October, a decline of approximately 6%. This figure landed nearly three points below the 53.0 reading forecast by economists polled by the Wall Street Journal.
This is the lowest the index has been since June 2022, when it hit 50.0 during the peak of pandemic-era inflation. The current reading represents the most pessimistic assessment from American consumers since the survey's inception in 1978.
Widespread Economic Anxiety
Joanne Hsu, the director of the survey, stated that the ongoing government closure is fuelling broad-based economic fears. "With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy," Hsu said.
The decline in sentiment was universal, affecting Americans regardless of their age, income level, or political affiliation. This indicates that economic concerns are being felt across the entire demographic spectrum.
Data Blackout and Private Sector Reports
The sentiment slump coincides with a blackout on official federal economic data, leaving investors and policymakers in the dark. Key reports, such as the monthly jobs figures, have been suspended.
In the absence of government data, the market has turned to privately funded research for insights:
- Payroll supplier ADP reported that private employers added 42,000 jobs in October, a figure better than expected but a dramatic slowdown from the 188,000 three-month moving average seen from November to January.
- Outplacement firm Challenger, Gray & Christmas announced that US-based employers planned 153,074 job cuts in October. This marks a 175% increase from the 55,597 cuts announced in October 2024 and is the highest level of October layoffs since 2003.
Commenting on the bleak sentiment report, Alex Jacquez of the Groundwork Collaborative think tank placed blame on presidential leadership. "Americans are losing faith in the economy because they're losing ground," Jacquez said, criticising what he termed economic mismanagement that has left households grappling with record debt and rising prices.
