Americans are growing increasingly worried about the economy, with consumer sentiment dropping to one of its weakest readings on record in November. According to the University of Michigan’s final survey, sentiment came in at 51 — up slightly from an earlier mid-month plunge but still well below October’s reading and nearly 30% lower than a year ago.
The slight improvement followed the end of the prolonged government shutdown on November 12, but unease remains. Concerns over high prices, weakening incomes, persistent inflation, and rising job-loss fears continue to worry household expectations and spending outlooks heading into the new year.
Inflation Fatigue and Income Stress Dominate Household Views
Consumer concern goes beyond headline inflation. Survey director Joanne Hsu noted that Americans are increasingly focused on their personal finances, particularly the rising cost of essential goods, health insurance premiums, and everyday living expenses. While year-ahead inflation expectations eased only slightly from 4.6% to 4.5%, worries about real income erosion have intensified.
Households reported a 15% drop in perceptions of their current financial health compared to October. Many Americans feel they are earning less in real terms, even as prices stabilize. That disconnect is reinforcing pessimism and discouraging optimism about economic improvement over the next six months. Some analysts noted that the shutdown itself didn’t create fear so much as highlight economic weakness. With government funding only secured through January, uncertainty remains a significant driver of low sentiment.
Job-Loss Anxiety Rises to Pandemic-Era Highs
Labor market concerns have risen sharply, with 69% of consumers now expecting unemployment to grow over the next year — more than double the share from this time last year. The probability of losing one’s job reached its highest level since 2020, despite a labor market that remains historically tight on paper.
Young workers are especially worried. For Americans aged 18 to 34, fears of job loss over the next five years hit their highest level since 2012. Analysts say that younger workers tend to feel instability most acutely when volatility rises, especially in industries vulnerable to layoffs or automation.
Even those with strong financial cushions aren’t immune. Consumers with large stock holdings briefly felt more optimistic earlier in November, but that uptick disappeared as the market retreated — showing how dependent sentiment has become on volatile financial conditions.
Layoffs, Healthcare Costs, and Policy Uncertainty Weigh on Outlook
Layered on top of inflation and labor worries are rising health insurance costs and a growing number of corporate layoff announcements across tech, finance, and consumer services. Analysts have pointed to a pattern of companies trimming headcount quietly through hiring freezes, restructuring, and performance-based reviews rather than broad cuts — a trend that fuels anxiety even without a spike in headline unemployment.
At the same time, consumers are bracing for higher medical expenses in 2026 as insurance premiums rise, making budgeting more difficult. Add unstable policy conditions — including a government budget that expires at the end of January — and households see little reason to feel secure about next year.
Looking Ahead
Consumer sentiment may remain weak through early 2026 as job fears, high living costs, and policy uncertainty converge. Even if inflation continues moderating, Americans appear more focused on personal financial stress than on macroeconomic trends. Unless wage growth improves meaningfully or layoffs recede, household caution could weigh on spending during a crucial retail season and slow broader economic momentum.
Markets are now watching whether consumer anxiety translates into reduced demand — and whether a stressed consumer becomes the next major economic drag. For now, sentiment signals that confidence isn’t just low; it’s fragile.
