Americans are feeling increasingly pessimistic about the economy. A new survey from the University of Michigan shows that optimism about the future fell sharply in November, driven largely by anxiety over the month-long federal government shutdown and concerns about what it means for jobs and the economy.
The Index of Consumer Sentiment dropped 6% from October to 50.3, a 30% decline compared to November 2024. The survey, which tracks how Americans feel about everything from their personal finances to the broader economy, shows widespread worry across all income levels, age groups, and political backgrounds.
The biggest hit came from how people view their own pocketbooks. Consumers reported feeling 17% worse about their personal financial situations. Those without significant stock holdings felt particularly gloomy, while the relatively small group of wealthy investors with large stock portfolios actually felt better.
Americans’ concerns about rising prices have eased slightly from earlier this year, but remain elevated. People expect prices to rise 4.7% over the next year, up just a tick from 4.6% in October. Long-term inflation expectations actually improved, dropping to 3.6% from 3.9%, suggesting that many Americans believe price increases will eventually moderate.
The government shutdown, which has now dragged on for more than a month, appears to be the main culprit behind November’s sharp drop in confidence. Consumers worry that the prolonged shutdown could harm the economy, lead to job losses, and create broader financial instability.
The drop in consumer confidence is significant because when Americans feel pessimistic, they tend to cut back on spending. This can slow economic growth, as consumer spending drives roughly 70% of the U.S. economy. The sharp divide between wealthy investors (who remain optimistic thanks to stock gains) and ordinary Americans (who are increasingly worried) highlights growing economic inequality and suggests that recovery could be uneven.
The University of Michigan will release final November data on November 21.
