:max_bytes(150000):strip_icc()/GettyImages-2209955945-0c993d12bf7840eab62e484c958daf87.jpg "Consumers Haven’t Felt This Bad About the Economy Since 2022")
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Key Takeaways
- The Michigan Survey of Consumers survey showed that the public’s view of current economic conditions in October was the lowest since 2022.
- While inflation worries persist, the survey also showed an increasing number of consumers are worried about job losses amid weakness in this summer’s employment numbers.
- Nearly half of consumers said high prices were eating into their personal finances, even as inflation expectations declined slightly this month.
Worries about job losses and continued price pressures are raising anxiety.
The Michigan Survey of Consumers measurement of current economic sentiment in October fell to its lowest levels since August 2022, when a sharp rise in inflation was hammering consumers. Worries over the job market are spurring the current drop in consumer sentiment, according to Navy Federal Credit Union Chief Economist Heather Long.
Why This Is Important for Consumers
If consumers are having negative feelings about the economy, it’s likely to impact their spending decisions. That could potentially impact other segments of a U.S. economy that is largely supported by consumer spending levels.
“Anxiety is back for American consumers,” Long wrote. “Over 60% are worried that unemployment is going to rise in the next year and almost 70% do not think the government is doing a good enough job fighting inflation and joblessness.”
While employment data has shown that the labor market softened this summer, the September jobs report has been delayed by the ongoing government shutdown.
“The key for the economy is to prevent further job losses. If there’s less fear about losing jobs, then sentiment is likely to improve, especially among the middle class,” Long wrote.
Sentiment Drops for Third Straight Month as Price Pressure Squeeze Middle Class
The influential survey showed that consumers also remained concerned about prices, but are expressing few worries over the ongoing government shutdown. About 45% of consumers told surveyors that high prices were eroding their personal finances, with a nearly equal share saying that their personal finances were worse than they had been a year ago.
“The K-shaped economy is causing a lot of stress for middle-class and moderate-income Americans,” Long said. “Food and electricity prices are rising quickly. Households are trying to make every dollar count by shopping at discount stores, but it’s not easy having to switch meal plans and shopping patterns to lower costs.”
Despite that, inflation expectations declined slightly in the October survey. Consumers now expect prices to rise by 4.6% over the next year, down from the highs seen in May amid Trump’s tariff push. The data comes as today’s release of the Consumer Price Index inflation report showed that price pressures increased again in September, but not to the level economists had expected.
