US Consumer Sentiment (Nov. 2025)

Government shutdown weighing on households’ mood

The further decline in the already weak University of Michigan consumer sentiment measure to a three-year low of 50.3 in November confirms that the government shutdown is adding to household anxiety, compounding lingering concerns over inflation and weakening job prospects.

The 3.3-point fall in the headline sentiment index brought it to 50.3, the lowest since June 2022. The decline was driven largely by a 6.3-point drop in the current conditions component to 52.3 – its lowest reading since 1950. Historically, this index has correlated closely with labour market conditions, raising concern about the health of the jobs market in the absence of official data. Even so, jobless claims collated at the state-level remain muted, which should offer some reassurance the jobs market has not entered a sudden downturn. The forward-looking expectations index also fell, despite the stock market reaching new all-time highs during the survey window. However, the survey noted that “consumers with the largest tercile of stock holdings posted a notable 11% increase in sentiment,” providing (soft) evidence that wealth effects are supporting confidence — and potentially spending — among higher-income households. Finally, inflation expectations remained elevated, though long-run expectations dropped back slightly to 3.6%, from 3.9%.

Overall, extremely weak sentiment in November appears mostly shutdown-driven. While any recovery when the shutdown ends would leave sentiment low by historical standards, we still expect fairly healthy consumption growth this quarter and into next year, as the link between sentiment and spending has been weak in recent years.