Sep 27, 2023 - Economy

Americans' feelings about the economy are getting worse

U.S. consumer sentiment index
Data: Morning Consult; Chart: Tory Lysik/Axios Visuals

A few measures of consumer sentiment are flashing warning signs that show the American vibe shifting downward again.

Why it matters: The data shows that the recent reversal in gas prices (heading up) and the stock market (heading down) is weighing on our mood. So is the continuing reality of living in a higher-price world.

Driving the news: After rising for much of 2023, consumer sentiment fell in September, according to polling out Wednesday from the Morning Consult/Axios Inequality Index.

  • Consumer sentiment fell 4.3% in September for higher-income households — earning at least $100,000 a year. It fell 2.8% for middle-income folks and 0.5% for low-income households.
  • Sentiment is measured by asking consumers how they're feeling about their personal finances and business conditions, now and in the future. Pollsters also ask if now is a good time to make a major household purchase.

"I think this is a cause for concern," said Jesse Wheeler, a senior economist at Morning Consult.

  • And there are economic headwinds to watch, he points out, including an auto strike that could grow more widespread and the potential government shutdown.

Meanwhile, the Conference Board's measure for consumer confidence fell in September for the second straight month and is now at a four-month low.

  • The group's expectations index, which measures people's short-term outlook for income, business and job market conditions — declined below 80 in September — a level that has historically signaled a recession within the year.

The big picture: Our national mood took a hit in 2020 and though there have been swings back up, the mood hasn't yet come back to where it was pre-pandemic.

  • Inflation is playing a big role here. Though the rate of price increases has certainly come down from the highs we saw last year, prices are still higher overall — and they aren't going back down.
  • As Catherine Rampell at the Washington Post recently wrote, "People sometimes ask me when prices are going to 'come back down' to what they were pre-pandemic ... the short answer is: probably never."
  • And though that's good for the economy — deflation is generally considered a bad thing at the macro level — higher prices are effectively a continual bummer for consumers.

Zoom out: The consumer sentiment data tracks with political polling that shows voters in a dark mood about the economy.

  • That's a major issue for President Biden, who's tried to turn the term "Bidenomics" into something positive.
  • In one poll out this week, 44% of voters said they're worse off financially under Biden — the most for any president since Ronald Reagan in 1986.
  • Yes, but: Conditions swung in Reagan's favor after that, and Reaganomics ultimately proved to be a winning term.

Reality check: This is just a few months' data.

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