Consumer sentiment in November fell to its lowest level since 2022 as the government shutdown became the longest in U.S. history.
In a preliminary reading, the University of Michigan consumer sentiment index fell to 50.3 in October, down from 53.6 the month before, the group announced on Friday. This marks a nearly 30% year-over-year decline, another warning signal for President Donald Trump, who has been facing a slowing labor market.
The survey’s index for current economic conditions notably dropped to 49, the lowest it has been in the survey’s history.
The preliminary numbers are the first to be released after the government entered a shutdown at the start of the month. Markets have largely shrugged off the shutdown, but there are still implications for the economy.
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Not only did consumer sentiment fall, but long-run inflation expectations also remain high, a worrying indicator.
Year-ahead inflation expectations rose slightly to 4.7%. Long-run inflation expectations declined from 3.9% to 3.6%. This is notably higher than current inflation and could indicate that consumers expect Trump’s tariff agenda to raise prices in the coming months.
Still, long-run inflation expectations are lower than the 4.4% level in April, following Trump’s unveiling of his aggressive tariff agenda.
The new numbers add to indications that the labor market is sputtering.
Due to the shutdown, there have been no releases of federal employment data, making interpretation more challenging for the Federal Reserve and economic analysts.
Still, the most recent available data show the economy added just 22,000 jobs in August, and the unemployment rate rose to 4.3%. Also, the July jobs report revealed that some 258,000 fewer jobs were added in May and June than previously reported.
Additionally, the government announced that labor market growth for the 12 months ending in March was 911,000 jobs fewer than previously reported.
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Two new employment reports from nongovernment sources were also released this week.
Payroll processing company ADP found that private employers added 42,000 jobs in October, while consulting firm Challenger, Gray & Christmas found that U.S. employers announced 153,074 job cuts in October.
