:max_bytes(150000):strip_icc()/GettyImages-2166227386-58f2f70726b2493688197f553e199499.jpg "Economic Worries Are Rising for Most Americans, But Big Stock Holders Stay Positive")
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Key Takeaways
- The University of Michigan’s widely followed index of consumer sentiment declined in September amid worries about a weakening labor market and stubborn inflation.
- The survey showed sentiment declined across groups, with one notable exception: holders of big stock portfolios.
Worries about the job market and stubborn inflation have most Americans feeling worse about the economy, though one group of investors remains optimistic.
The University of Michigan said its Consumer Sentiment Index declined about 5% this month compared with August, as a wide swath of the public voiced concerns about the outlook for the economy. But not respondents with large stock portfolios, whose feelings about the economy held steady, according to the report.
The Major U.S. stock indexes have hit a string of stock market record highs in recent weeks.
“The disparity in views highlights key differentiators between those with high stock ownership and those with little or no exposure to equities,” wrote Jim Baird, chief investment officer with Plante Moran Financial Advisors. “Not surprisingly, heavy stock investors that have benefited from the rising stock market have remained more upbeat on a relative basis.”
Why This Matters to You
Consumer sentiment surveys can offer a look into how likely people are to make purchases, with consumer spending acting as a key pillar of support for the economy. While people don’t always do what they say, sentiment surveys are one way to measure the pulse of the economy.
Job Worries Weigh Heavy
The sentiment index dropped to 55.1 in September, 21% below the year-ago level though still higher than levels around 52 registered in April and May, after President Trump’s “Liberation Day” tariffs announcement heightened economic concerns and rattled financial markets.
This month’s decline came as 65% of those surveyed said they expect unemployment to rise, up from 35% a year ago. And the number of consumers who say they worry about losing their own job hit its highest level since March. Recent data has shown that employers are adding fewer jobs than previously thought.
“Responses to multiple survey questions all show that the financial outlook for consumers has deteriorated,” Survey Director Joanne Hsu said in a release.
Inflation, Slow Income Growth Could Hold Back Spending
While inflation expectations softened slightly in September, 44% of respondents said that persistent high prices were eroding their personal savings, the highest level since last November.
“Consumers don’t feel great,” said Nationwide financial markets economist Oren Klachkin, who sees higher prices, along with slower income growth as likely to hold back consumer spending, though today’s release of the Personal Consumption Expenditures report showed consumers continued to spend in August, despite inflation ticking higher.
“These trends suggest that, for many consumers, robust spending will be difficult to maintain going forward,” Hsu said.
