It feels like everyone is talking about higher prices, economic uncertainty, and concerns about the future. If you’ve found yourself delaying a purchase, spending less, or worrying about job security, you’re not alone.
Consumer sentiment in the United States recently fell to a record low. But what exactly does that mean?
Consumer Sentiment vs. Consumer Confidence
While the terms are often used interchangeably, they measure slightly different things.
The Consumer Sentiment Index, published by the University of Michigan, measures how people feel about their own financial situation today and what they expect in the future.
The Consumer Confidence Index, published by The Conference Board, focuses more broadly on how people view the overall economy.
Both surveys ask thousands of households about their financial outlook, spending plans, employment concerns, and economic expectations.
Why the Recent Numbers Matter
The latest Consumer Sentiment reading came in at 44.8 — the lowest level recorded since the survey began in 1952.
That means Americans are reporting greater financial stress and uncertainty than they did during:
- The 2008 Financial Crisis
- The COVID-19 pandemic
- The period following 9/11
That’s a remarkable statistic.
For many households, rising costs continue to be the primary concern. Higher prices for groceries, gasoline, housing, insurance, and other necessities are stretching budgets and making it harder to get ahead.
In fact, more than half of consumers surveyed reported that inflation and higher prices are negatively affecting their personal finances.
Why Doesn’t the Stock Market Seem to Care?
One of the most interesting aspects of today’s economy is the disconnect between how consumers feel and what financial markets are doing.
Consumer sentiment is near record lows, yet the stock market remains near record highs. How can both be true?
The answer is that not everyone is experiencing the economy the same way.
Many higher-income households continue to have strong balance sheets, healthy savings, and steady employment. They are still traveling, dining out, buying homes, and investing. Their spending continues to support economic growth.
Meanwhile, middle- and lower-income households are feeling much more pressure from inflation and higher living costs.
In other words, parts of the economy are struggling while other parts remain surprisingly resilient.
What Could Improve Consumer Sentiment?
In the short term, lower prices for essentials such as food, energy, and housing would likely help consumers feel more optimistic.
Over the longer term, job security, wage growth, and a stable economic environment tend to be the biggest drivers of confidence.
When people feel secure in their ability to earn income and meet their financial goals, sentiment usually improves.
What Should You Do?
Rather than reacting to economic surveys or daily market movements, focus on the factors you can control:
- DO THINGS THAT BRING YOU JOY!
- Spend time with family and friends
- Enjoy nature – get outside
- Turn off the news and limit social media
- Read that book you’ve been wanting to start
- Go listen to live music
If you’re concerned about your financial situation, retirement plans, investments, or overall strategy, we’re here to help.
New clients schedule a strategy session to talk about your situation, goals and concerns. If you are a current client, contact us for a personal review of your plan at info@astifinancial.com.