Consumer Sentiment Hits Record Low Despite Strong Economic Indicators
The Story
A recent University of Michigan survey recorded the lowest level of consumer sentiment in the postwar era, with an index reading of 53 in summer 2022 that has since declined further under President Donald Trump’s second term. The drop was initially driven by tariffs and later by the Iran war and surging gas prices. A CNN survey this week found that only 47 percent of respondents believe most people can get ahead with hard work, down from 67 percent in 2016, with the pessimistic swing similar across age, race, and gender. President Trump’s approval ratings on the economy hit all-time lows in recent weeks: 39 percent in a CNBC poll and 30 percent in a CNN poll. These declines occurred while GDP growth, jobs numbers, and the stock market remain near all-time highs. In CNN’s open-ended question, 76 percent of respondents cited affordability as the biggest economic problem facing their family. New data released Tuesday showed inflation at its highest level in three years, partly due to higher energy prices from the Iran war, and inflation outpacing wage growth for the first time in three years, according to Navy Federal Credit Union chief economist Heather Long. Wednesday’s data showed producer prices rising the most since 2022, a potential early sign of future price increases for customers.
Key Facts
- University of Michigan consumer sentiment hit its lowest level in the postwar era.
- CNN survey: 47 percent agree most people can get ahead with hard work, down from 67 percent in 2016.
- Trump’s economic approval: 39 percent (CNBC) and 30 percent (CNN), both all-time lows.
- GDP growth, jobs numbers, and stock market remain near all-time highs.
- 76 percent of CNN respondents cite affordability as the biggest economic problem.
- New data: inflation at highest in three years, partly from Iran war energy prices.
- Inflation outpaced wage growth for the first time in three years (Heather Long).
- Producer prices rose most since 2022.
- Economists Jared Bernstein and Daniel Posthumus proposed a “vibe gap” theory: a sustained four-decade period of low inflation created expectations that made 2020s inflation feel like a fundamental betrayal.
Conflicting Reports
No conflicting reports identified in the source article.
Still Unclear
No open questions identified in the source article.
Misconceptions
No widespread misconceptions addressed in the source article.
Key Figures
- President Donald Trump
- President Joe Biden
- Jared Bernstein, economist
- Daniel Posthumus, economist
- Heather Long, chief economist of Navy Federal Credit Union
Sources: vox.com
