Americans Feel Dour About the Economy but Continue to Spend

New York, NY, December 8, 2025-"American households are nearing the end of the year feeling a lot more dour about the economy than they did at the beginning, even as they keep spending,” according to the Wall Street Journal.

“High prices, a fragile job market and anxiety about President Trump’s tariffs have helped drag consumer sentiment, as measured by the University of Michigan, down near historic lows this year. The latest numbers were slightly improved from a previous reading freighted by government shutdown disruptions, but barely.

“‘People are not feeling confident about the economy,’ said Joanne Hsu, who directs the University of Michigan Surveys of Consumers. Americans are still looking back to prices they paid before the Covid-19 pandemic and struggling to digest the increases since then.

“‘We haven’t collectively come to grips that that is behind us,’ said Hsu.

“The surveys are only one view of economic conditions, but they offer a consistent check of consumers’ changing mood. Economists and analysts look at the results to help monitor and forecast the health of the economy.

“The closely watched sentiment survey asks people how they feel now and down the road about their own financial situation and the economy as a whole. Those responses are then baked into an equation that produces a number ranging from 2 to 150.2. Higher numbers reflect a rosier outlook.

“The survey shows that the nation started the year in relatively decent spirits about the economy, with a reading above 70 in January. Nearly a year later, a preliminary monthly reading released in early December showed sentiment slightly above 53. That’s better than the previous reading of 51, which was dented by the government shutdown that ended in mid-November. The December report, based on Nov. 18 to Dec. 1 surveys, will be updated through Dec. 15 for a final reading later this month.

“The University of Michigan has been conducting its consumer surveys since the middle of the 20th century. Currently, the monthly readings are based on about 1,000 interviews among households that answer dozens of questions tracking consumer attitudes and expectations.

“The sentiment index hit its all-time high of 112 in 2000, when the economy was cruising just before the full impact of the dot-com crash and before the terrorist attacks of Sept. 11, 2001.

“It bottomed out to an all-time low of 50 in June 2022, when inflation spiraled shortly after Russia invaded Ukraine.

“The monthly number neared that low point again this spring, when the president’s tariff rollout sent markets tumbling and raised inflation fears. After recovering and topping 60 midyear, sentiment numbers sank again as concern grew about sluggish labor-market hiring, and then the government shutdown.

“Weak readings don’t mean Americans aren’t spending, or that the economy is stalling. Retailers from Walmart to T.J. Maxx have reported signs of a solid holiday shopping season. Big stock-market investors are much more positive about the economy.

“Still, less-affluent households have been pulling back on routine purchases to give priority to things they need sooner, while upper- and middle-income consumers race ahead. And retail-sales growth has cooled amid concerns about tariffs affecting prices.

“The survey also continues to show a wide gap in how people feel based on party affiliation, with participants who identify as Republicans showing significantly higher sentiment than Democrats or Independents. Democrats felt better than Republicans when Joe Biden was president.”