U.S. consumer confidence just collapsed to one of the lowest points ever recorded, as the longest government shutdown in U.S. history continues into another month, according to the University of Michigan’s survey released Friday.
The University’s Index of Consumer Sentiment fell to 50.3 in early November, dropping 6.2% from October and roughly 30% lower than the same period a year ago.
This reading is now lower than the 2008 financial crisis level, and just barely above the all-time worst sentiment level ever logged. Economists surveyed by Dow Jones expected a reading of 53.0, making the decline even sharper than forecasted.
Sentiment hasn’t been this low since June 2022, when inflation hit a 40-year peak, and November’s level is also the second lowest since the tracking began in 1978.
Survey Director Joanne Hsu said that the US government shutdown overshadowed record highs in stock prices that would normally lift public outlook.
Hsu explained that with the shutdown dragging past a month, Americans were openly worried about “potential negative consequences for the economy.”
Hsu said the downturn in mood was seen across age, income, and political groups, meaning people from all sides are feeling pressure.
The current conditions index fell to 52.3, dropping by nearly 11% from last month and becoming the lowest reading since the index was created in 1951. The future expectations index slid to 49.0, down 2.6% on the month. Compared to last year, the declines were even sharper: 18.2% lower for current conditions and 36.3% lower for expectations.
Federal workforce and food aid programs are facing direct strain
Senior economist Elizabeth Renter at NerdWallet said tighter financial pressure is spreading. After introducing her, she said, “Across the economy, segments of the population are increasingly dealing with tighter financial conditions.”
She pointed to federal workers and people who rely on food assistance, but also noted that middle-income families are starting to feel stress too. Inflation expectations shifted slightly, with the one-year outlook nudging to 4.7%, while the five-year estimate slipped 0.3 percentage points to 3.6%.
The Michigan survey also found clear differences among households based on wealth. Hsu noted that people with significant stock holdings actually saw their sentiment increase by 11%, likely because markets have been hitting fresh highs.
But most families do not hold large stock portfolios, meaning the improvement in that group did not change the national picture.
Max Levchin, CEO of Affirm, said the company is not yet seeing credit stress from federal workers who use buy-now-pay-later services. After introducing him, he said, “We are seeing a very subtle loss of interest in shopping just for that group, and a couple of basis points,” during an interview on CNBC Friday.
The Bipartisan Policy Center reported this week that about 670,000 federal employees have been furloughed, and 730,000 are working without pay as the shutdown continues with no resolution in sight.
Meanwhile, the shutdown’s effects extend far beyond workers. The federal funding lapse, which began Oct. 1, is the longest in U.S. history and has halted work across agencies with an impact beyond those who are government employees. The SNAP food benefit program, which serves 42 million Americans, has also been cut off.
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