Shocking Decline: US Consumer Sentiment Hits Lowest Point Since 1952 – What It Means for Your Wallet

Americans are feeling particularly grim about the economy. According to a recent survey by the University of Michigan, consumer sentiment dropped 11% to a score of 50.8. This is one of the lowest levels recorded since 1952, even lower than during the Great Recession.

Much of this pessimism stems from President Trump’s ongoing trade war. The uncertainty surrounding his tariffs has taken a toll on people’s moods. “This decline in sentiment spans all demographics,” said Joanne Hsu, director of the survey. She noted that overall sentiment has fallen over 30% since December 2024 due to increasing concerns about the trade situation.

The economy relies heavily on consumer spending, which accounts for about 70% of it. The Federal Reserve and Wall Street are monitoring how this decline in optimism will affect spending habits. Notably, spending has remained fairly strong despite rising concerns about job security. Data shows that perceptions of unemployment are rising, with many people expecting job losses in the coming year.

Despite these worries, businesses have been hiring at a solid pace, and many shoppers continue to spend. However, there are signs that retail sales growth is slowing down. Janet Yellen, former Fed chair, emphasized the connection between sentiment and spending. She noted that even during tough times, such as the pandemic, consumer spending remained resilient.

The impact of wealthier Americans is significant as well. High-income consumers have historically supported the economy through their spending. Bill Adams, chief economist at Comerica Bank, points out that while wealthy consumers have kept spending strong, their confidence may wane if economic conditions worsen.

Inflation is a big concern right now. Research indicates that inflation expectations among consumers have surged, leading to fears about prices staying high. Currently, consumers expect inflation to rise to 6.7% over the next year, the highest level since 1981. If this perception becomes entrenched, it could complicate efforts to stabilize the economy.

Experts are cautious. Lorie Logan, president of the Dallas Fed, warned that if inflation expectations become ingrained, recovery could be drawn out. Consumers, fresh from experiencing a period of high inflation, are particularly sensitive to price changes, making it critical for the Fed to navigate these expectations carefully.

In summary, while the economy shows mixed signals—steady hiring and resilient spending contrast with declining consumer confidence and rising inflation pressures—the path ahead is uncertain. Keeping an eye on how these factors play out will be crucial for everyone involved, from policymakers to everyday consumers. For more detailed statistics and insights on consumer behavior and the economy, you can visit the Federal Reserve’s official site here.

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