US Consumer Sentiment Crashes as Confidence Craters

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Rising layoffs, inflation, and fears of a government shutdown darkened the outlook, University of Michigan data showed.

By S JHA

Mumbai, November 7, 2025 — Consumer sentiment in the United States has fallen sharply to its lowest level in more than three years, reflecting growing frustration with economic policy and deepening pessimism about household finances and business conditions, according to new data from the University of Michigan’s preliminary November survey.

The sentiment index dropped to 50.3, a decline of nearly 6% from October’s 53.6 reading, marking the worst level since June 2022, Bloomberg reported. The survey showed that 70% of respondents now have a “poor” view of the US government’s economic policy, the weakest approval since the COVID-19 pandemic, according to data shared by market strategist Michael McDonough on X.

“Consumers are not too happy,” noted Kathy Jones, chief fixed income strategist at Charles Schwab. “Both expectations and current conditions moved lower and are near the lowest level in roughly a decade.”

The decline in sentiment coincides with a backdrop of rising layoffs, a slowing labour market, and political uncertainty surrounding the looming federal government shutdown. According to Yahoo Finance, October job cuts hit their highest level for that month in more than 20 years, adding to what analysts now call the worst year for layoffs since 2009.

The Wall Street Journal reported that households’ views of their current personal finances and year-ahead business conditions both weakened substantially. Many respondents cited anxiety over inflation persistence, high borrowing costs, and fears that political gridlock could further derail economic stability.

Market analysts say the sentiment slump has added a layer of bearishness to already fragile markets. Stocks fell in early trading Friday before recovering slightly as investors weighed the implications of a consumer pullback.

“The ‘current conditions’ measure of this survey set a new all-time low,” said Jim Bianco of Bianco Research on X. “Before 2020, the stock market was the primary driver of the public’s economic outlook. Since COVID, that relationship has completely disconnected. Half the country owns no assets and lives paycheck to paycheck — they’re angry at a booming market that worsens inequality.”

Economists warn that consumer sentiment is often a leading indicator of spending trends, meaning a prolonged downturn could dampen household consumption heading into the holiday season. With inflation still above the Federal Reserve’s 2% target and fiscal policy constrained by debt limits, the latest reading signals deep-rooted anxiety among American consumers — and limited room for policy missteps.

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