Further, the long government shutdown has deeply eroded American consumers’ confidence in the economy. Overall, we’ve witnessed a consumer sentiment drop-off that is unprecedented. The latest consumer sentiment survey dropped to its lowest level since June 2022. This drop represents the most negative reading ever registered since the initiation of the survey in the 1950s.
Joanne Hsu is director of consumer surveys at the University of Michigan. She reiterated that most Americans are concerned with where the economy is headed. That’s a 6.2% decrease from October’s optimistic outlook. In fact, it’s dropped by a jaw-popping 29.9% from where it stood this time last year. Two figures together paint a picture of increasingly dour consumers.
The unprecedented federal government shutdown, now entering its fifth week, has only heightened this sense of confusion and disillusionment. Many Americans are voicing their worries about potential negative consequences for the economy as essential services remain stalled due to the lack of funding.
“With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy,” – Joanne Hsu, director of surveys of consumers at the University of Michigan.
With the shutdown dragging on, the economic impacts and uncertainty will no doubt be top of mind. Consumers are increasingly realizing the long-term damage that extended shutdown does to their financial security. They understand its impact on broader economic security too. This pessimism is being felt across industries, with companies citing reduced consumer spending and investor reluctance.
These interim survey findings should remind everyone about the often-overlooked interconnectedness of elected and career government operations and public opinion. Even if the shutdown ends soon, consumer confidence will have time to deteriorate even more. This troubling trend is likely to have dire impacts for the overall economy.