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U.S. Consumer Confidence Slides to Near-Record Lows, Highlighting Economic Anxiety

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  Published in Business and Finance on Wednesday, November 19th 2025 at 22:54 GMT by KOB 4

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U.S. Consumer Confidence Slides to Near‑Record Lows, Signals Growing Economic Anxiety

In a stark warning that the broader economy may be on a downward trend, the University of Michigan’s flagship consumer sentiment survey reported a sharp decline in confidence last week, pushing the index to a level that has not been seen since the early days of the COVID‑19 pandemic. The June reading of 64.9—a drop of 2.6 points from May’s 67.5—places the index among the lowest in the survey’s 75‑year history. This slide comes amid a perfect storm of rising inflation, a tight labor market, and concerns about future earnings.

What the Numbers Really Mean

The University of Michigan’s consumer sentiment index is a composite of two sub‑indicators: a measure of “current economic conditions” and an “expectation” of how the economy will perform over the next year. In June, the current‑conditions component fell to 60.6 from 68.5 in May, while the future‑outlook sub‑index dropped to 54.7 from a robust 70.5 in May. The divergence between the two components highlights a growing disconnect between how consumers feel about the present versus what they anticipate for the future.

The 12‑month change in sentiment, a key gauge of the survey’s momentum, fell 2.6 points from the 2.1‑point decline recorded in May. This is the steepest one‑month slide in the index’s recent history, and it has trended higher than the 12‑month decline in 2019—when the U.S. was still reeling from the recession. In addition, the “future outlook” sub‑index fell by a full 15.8 points, the largest one‑month drop in that component in the survey’s history. Those numbers suggest that consumers are not only disappointed with the current state of affairs but are also pessimistic about the path forward.

What’s Fueling the Decline?

The article cites three primary drivers of the slide:

1. Persistently High Inflation – Despite modest cooling in headline CPI, consumers continue to feel the pinch. A survey poll embedded in the report found that 71% of respondents believe inflation is “very high” or “high.” This sentiment mirrors the ongoing price pressure seen across groceries, housing, and energy.

2. Labor Market Tightness – Although the labor market remains tight, wages have stalled in many sectors. The Michigan survey noted that 51% of respondents expect their financial situation to deteriorate in the next year, a stark contrast to the 42% who anticipate improvement in the same period. Many respondents flagged stagnant wages and limited job prospects as key concerns.

3. Economic Outlook in a Rate‑Hike Era – The Federal Reserve’s 2023 policy path has been characterized by successive interest‑rate hikes to curb inflation. The University of Michigan’s “confidence in the U.S. economy” measure fell to 55.9 from 66.7 in May, reflecting a growing belief that the economy might be heading into a “soft landing” or worse, a mild recession.

Historical Context and Comparisons

To understand how severe the recent dip is, the article references the index’s performance in the 2020–2021 COVID‑19 lockdown period. When the U.S. economy first slumped, the index fell to a historic low of 47.7 in March 2020. Since then, sentiment has recovered, only to hit a new trough in June 2023. The 64.9 reading is the lowest in the survey’s data set since July 2018, when the index stood at 68.5.

In addition to the University of Michigan’s index, the article links to the Conference Board’s Consumer Confidence Index (CCI), which has also slipped in the past month. The CCI fell to 97.6 in July from 102.1 in June, marking the most significant decline since the Great Recession. These two leading consumer sentiment gauges are closely watched by policymakers, investors, and businesses alike because they often precede shifts in consumer spending—a key driver of GDP.

Implications for the Economy and Policy

A drop in consumer sentiment can spell trouble for the U.S. economy, especially if it translates into reduced household spending. The article cites a recent forecast from the Federal Reserve, which warns that a sustained decline in consumer confidence could weigh on GDP growth in the coming quarters. Conversely, the Fed may interpret the dip as evidence that inflationary pressures are cooling, potentially giving it some room to pause or even reverse rate hikes.

For businesses, the data underscores the need to manage expectations about demand. “Retailers and service providers should prepare for a potential slowdown,” the article notes, quoting a spokesperson from the National Retail Federation. “Pricing strategies will need to be sensitive to consumer sentiment to avoid eroding demand further.”

Where to Find More Information

The article includes several links for readers who wish to dig deeper:

• University of Michigan Consumer Sentiment Survey – The official release page provides the full set of data tables, methodology, and historical trends. (https://research.umich.edu/consumer-sentiment)
• Federal Reserve Monetary Policy – The Fed’s policy statement and minutes offer context on how the central bank interprets inflation and consumer data. (https://www.federalreserve.gov/)
• Conference Board Consumer Confidence Index – A side‑by‑side comparison of the two leading sentiment measures. (https://www.conference-board.org/consumerconfidence)
• National Retail Federation – Industry insights on how consumer sentiment impacts retail performance. (https://nrf.com/)

Bottom Line

The University of Michigan’s consumer sentiment report paints a gloomy picture for the U.S. economy: households are more anxious about the present and more pessimistic about the future, with inflation and a hard‑to‑predict labor market at the core of their worries. While the decline does not yet spell doom, it serves as a warning bell for policymakers, businesses, and investors that the next few months could bring a tightening of spending, slower growth, and potentially even a modest downturn. As the Federal Reserve monitors the data, market participants will be keenly watching for any signs that consumer confidence might either recover or continue its downward trend.