Americans are feeling worse about the economy as government shutdown drags on

By Elisabeth Buchwald, CNN

(CNN) — The record-breaking government shutdown has left Americans feeling worse about the economic outlook. That’s according to the latest University of Michigan consumer sentiment survey, which showed the index falling to 50.3 this month from 53.6 in October.

It’s the lowest level since June 2022, which marked the lowest reading on record since the survey’s inception in the 1950s.

“With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy,” Joanne Hsu, director of surveys of consumers at the University of Michigan, said in a statement.

The drop this month represents a 6.2% decline from October and a 29.9% decline compared to last November. Meanwhile, economists polled by FactSet had been anticipating a slight improvement this month.

“The index certainly looks like the economy is ready to roll over the proverbial cliff,” Chris Rupkey, chief economist at FwdBonds, said in commentary issued Friday.

The increased level of pessimism was “widespread” across different ages, income levels and political affiliations, Hsu noted. The one notable exception was consumers who are heavily invested in the stock market. They reported an 11% improvement in sentiment as the stock market hangs near record highs.

That group of consumers is crucial because they have “the biggest influence on the aggregate consumer spending data, so continued strength here is important for the resilience of the economy overall,” Thomas Simmons, chief US economist at Jefferies, said in a note to clients Friday.

“However, that middle tercile is important too, and the decline in their sentiment appears to be intensifying. If this group is unable to continue to keep up their pace of spending, the top-line growth numbers may finally break from their above-trend pace,” he said.

This story is developing and will be updated.

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