The latest survey released by the University of Michigan on Friday, November 7th, showed that the U.S. consumer confidence index plunged to 50.3 in November, hitting its lowest level since June 2022, just slightly higher than the record low of 50 at that time.
According to CNBC, the latest data on consumer confidence dropped by 6.2% from the previous month’s 53.6, plummeted about 30% from 71.8 a year ago, and significantly below Dow Jones economists’ expectation of 53.0.
Joanne Hsu, the director of the Michigan University survey, stated that the ongoing federal government shutdown for over a month has sparked concerns among consumers about the potential negative economic consequences, which has become the primary reason for the collapse in confidence.
Hsu mentioned that the decline in confidence this month “exists universally across the population, spanning age, income, and political affiliation”. The current economic conditions index fell from 58.6 last month to 52.3, hitting a historic low since 1951; while the future expectations index dropped by 2.6% to 49.0 compared to last month. Both indicators experienced sharp declines of 18.2% and 36.3%, respectively, year over year.
Meanwhile, Hsu emphasized that only the top 33% of those who hold the most stocks have doubled their confidence due to the recent market rebound, with optimism rising by 11%, while other groups are generally pessimistic.
The fear of the ongoing Washington stalemate has outweighed the boost from the stock market reaching record highs.
Elizabeth Renter, a senior economist at NerdWallet, analyzed that in the broader economy, the more populous strata are increasingly facing tighter financial situations. This is certainly true for federal employees and those relying on federal government food assistance, as well as possibly for middle-income Americans.
Inflation expectations are relatively under control, with the outlook for inflation a year from now rising slightly to 4.7%, and at 3.6% for the five-year period, down by 0.3 percentage points from last month. However, the actual data remains unoptimistic.
The consumer price index shows that the annual inflation rate in September remained at 3%, higher than the 2.7% in November 2024. The unemployment rate has risen from 4% in January to 4.3% in August (due to the shutdown, the latest data was interrupted), with significant job growth decline.
Michael Peace, Deputy Chief Economist at Oxford Economics, stated that the sharp decline in confidence may see a rebound after the government shutdown ends. “We also believe inflation is nearing its peak, and next year, actual income growth will rebound, aided by a strong tax refund season, which should help support confidence.”
However, he warned that past over-hiring, coupled with the surge in AI productivity, could lead to “a lack of employment expansion”, posing a “more prolonged drag on consumer sentiment”.
The Trump administration is facing dual pressures from the economy and the government shutdown. President Trump said in a speech on Wednesday that his major tax cuts introduced in July, tariff revenues, and wage increases all demonstrate the brilliance of his economic strategy.
During an interview with Fox News’ Bret Baier, he claimed, “I think prices are coming down, they’ve already come down.” He also criticized Democrats for “lying” about it.
In the local elections on Tuesday, November 4th, the Republicans suffered heavy losses. Democratic gubernatorial candidates Mikie Sherrill in New Jersey and Abigail Spanberger in Virginia easily defeated their Republican opponents.
Moreover, Democratic state legislative candidates in both states also won decisively in traditionally strong Republican areas.