Consumer sentiment fell this month amid government shutdown

Consumer sentiment fell six percent this month amid increasing concerns over the prolonged federal government shutdown, according to the University of Michigan Surveys of Consumers..The index tracking consumer sentiment fell 6.2 percent to 50.3 from 53.6 in October, and was down 30 percent from its year-ago mark of 71.8. The index of current economic conditions fell 10.8 percent to 52.3 from its month-ago mark of 58.6, and dropped 18.2 percent on an annualized basis from 63.9. The index measuring consumer expectations fell 2.6 percent to 49.0 from 50.3 in October, and was down 36.3 percent from 76.9 from November 2024. The latest report showed steep drops in views of personal finances and business conditions. Assessments of current personal finances fell 17 percent, while expectations for business conditions over the next year dropped 11 percent. Weakening sentiments were broad-based. Sentiment for wealthier households with significant stock holdings was an exception, increasing 11 percent amid continued stock market strength. Year-ahead inflation projections increased to 4.7 percent from 4.6 percent in October, while long-term inflation expectations fell to 3.6 percent from 3.9 percent. Both are under their highs earlier this year. As of Nov. 7, the 38-day government shutdown is the longest in U.S. history. Senate Democrats have refused to pass more than a dozen clean bills approved by the Republican-led House to reopen the government over the party’s desire to extend Affordable Care Act subsidies passed in 2021. The subsidies, which are set to expire at the end of this year, lowered the mandatory percentage of income enrollees pay for health insurance and did away with the 400 percent of the federal poverty level income cap. Republicans say the changes benefited insurance companies more than customers, and want to open the government before voting on whether to extend the subsidies. While a decision to reopen the government until Nov. 21 has been floated, the two parties have not agreed to do so. The length of the shutdown has led to a sharp rise in flight cancellations due to staff shortages. “The federal government shutdown dragging on for over a month has consumers worried about potential negative consequences for the economy,” said Surveys of Consumers Director Joanne Hsu.