U.S. consumers have rarely felt worse about their economic futures, according to data released Friday from the University of Michigan's widely followed Surveys of Consumers.
Consumers’ five-year outlooks for their household finances fell to the lowest in over a decade in October, preliminary results of the monthly survey found. With an index reading of 96, it's the worst month since at least July 2011, when the survey resumed asking the question about the five-year outlook.
Overall consumer sentiment was essentially unchanged from September, but was down 22% compared with the reading for October 2024.
“It’s very clear consumers don’t feel like they’re thriving,” said Joanne Hsu, the survey’s director. While consumers indicate that the prospect of a major financial calamity remains low, “they expect to continue to not thrive,” she said.
President Donald Trump’s shifting trade policies and federal spending cuts have helped keep the U.S. economy mired in uncertainty.
Trump was elected to a second term on promises to supercharge economic growth and bring down inflation. During his first few months in office, optimism that he would fulfill these promises buoyed consumer sentiment.
But the Trump bump evaporated starting in July, and the outlook measure has declined every month since.
“The headwinds facing households from the weak labor market and drag on real income growth from tariff-induced price increases” suggest the recent pace of consumer spending is “unsustainable,” Oliver Allen, senior U.S. economics analyst at Pantheon Macroeconomics research group, wrote in a note Friday.
The October downturn in the five-year outlook reading was driven primarily by middle-income households, whose sentiment fell to near all-time lows.
Among all households, concerns about unemployment and inflation remained elevated, the survey found.
Approximately 63% of respondents said they expect the unemployment rate to rise over the next year.
Meanwhile, long-run inflation expectations were unchanged, with the pace of price growth expected to hit 3.7% over the next five years. That is well above the Federal Reserve’s official 2% inflation target.
The latest NBC News Grocery Tracker shows inflation for many essentials remains elevated, with prices for ground beef and orange juice having moved sharply higher in recent weeks.
Perceptions of whether the federal government is doing a good job of fighting inflation and unemployment hit new lows in October. Among the respondents, 66% said Washington is doing a “poor” job, while just 18% said the effort was “good.”
The latest Michigan survey was conducted from Sept. 23 to Oct. 6.
In a statement, White House spokesperson Kush Desai said: “Robust real wage, consumer spending, and retail sales growth indicate that the Administration’s efforts to tame Joe Biden’s inflation crisis and get American booming again are paying off. As President Trump’s full suite of economic policies — from rapid deregulation to tax cuts to historic trade deals — continue to take effect, Americans can rest assured that the best is yet to come.”
The new Michigan data dovetails with other recent surveys that show ailing consumer health.
The Conference Board found that consumer confidence in September fell to its lowest level since April, when Trump unveiled massive “Liberation Day” tariff increases that shook global markets.
And earlier this week, the New York Federal Reserve’s survey of consumer expectations showed a reduced outlook for earnings growth, greater likelihood of losing one’s job and a higher likelihood of a rise in overall unemployment.
