Consumer confidence has taken a significant hit, dropping to nearly a record low. This is creating problems for President Trump as November approaches, especially with the job market slowing, inflation remaining stubborn, and a looming government shutdown.
The University of Michigan’s Consumer Confidence Index fell to 50.3 in November from 53.6 the previous month, and it’s quite a drop from 71.8 a year ago, as reported on Friday.
This month’s figures represent the worst consumer sentiment since 2019, approaching the record low of 50 seen in June 2022, which was during a time of post-pandemic inflation surges.
“As the federal shutdown continues past a month, consumers are worried about its potential negative effects on the economy,” noted Joan Hsu, director of Michigan Consumer Research.
This decline in sentiment, she mentioned, is felt widely across different demographics—age, income, or political beliefs don’t seem to provide any buffer.
Interestingly, only a small fraction of the population feels positively about the economy, primarily those in the top 33% of stockholders who have benefited from recent market gains.
Additionally, views on the economy have sharply decreased, with the Michigan Current Conditions Index dropping to 52.3 from 58.6 in October and 63.9 a year ago.
The survey appears amid rising tensions between President Trump and the Republican Party regarding the economic situation and how the government shutdown affects American families.
Republicans faced a significant setback in the recent elections, with Democratic candidates like Gov.-elect Mikie Sherrill (D.N.J.) and Abigail Spanberger (D.Va.) outperforming their GOP rivals. There was considerable support for Democratic candidates in New Jersey and Virginia, traditionally Republican strongholds.
This successful night for Democrats has raised concerns among Republicans, who might leverage economic issues to turn things around in 2024 and regain momentum for 2026.
In a recent speech, Trump emphasized his economic achievements, asserting that he helped revive the economy after former President Biden’s administration. He highlighted a major tax cut passed in July, tariffs boosting revenue, and rising wages as proof of his economic acumen.
During an interview with Fox News, Trump suggested that prices were already falling under his leadership. “I think they’re declining. I think they’re already declining,” he stated. He also mentioned that Republicans need to focus more on the term “affordability,” while criticizing Democrats for being dishonest.
Despite Trump’s claims of having tackled inflation, the data suggests a different narrative. The consumer price index indicates annual inflation was at 3% in September, consistent with January’s figures and higher than the 2.7% in November 2024.
Job growth has dropped, and the unemployment rate climbed from 4% in January to 4.3% in August, the most recent data available due to the government shutdown.
Michael Peace, deputy chief U.S. economist at Oxford Economics, mentioned that, even with the economic downturn, consumer sentiment could rebound after the shutdown. It’s worth noting that this shutdown is the longest on record.
“We also believe that with inflation nearing its peak and a robust tax refund season on the horizon, real income growth could improve next year, which would bolster confidence,” he added.
However, there are rising worries that the combination of past overemployment and productivity boosts from AI may lead to widespread unemployment, impacting consumer sentiment in the long run.
