US Consumer Sentiment Index 2025 | Statistics & Facts

Consumer Sentiment Index in America 2025

The US Consumer Sentiment Index has experienced a dramatic and unprecedented decline throughout 2025, marking one of the most challenging periods for American consumer confidence in recorded history. Published monthly by the University of Michigan’s Survey Research Center, the consumer sentiment index serves as a critical barometer of household economic outlook, measuring consumer assessments of personal finances, business conditions, and buying attitudes through approximately 50 core questions administered to about 600 households nationwide. In November 2025, the index plummeted to 50.3 points, representing the second-lowest reading since data collection began in 1978 and trailing only the 50.0 recorded during June 2022 when inflation reached forty-year highs.

The catastrophic deterioration in consumer sentiment throughout 2025 reflects a convergence of multiple economic stressors that have severely undermined household confidence. The ongoing federal government shutdown that commenced in early October and extended through November emerged as the dominant concern, with consumers expressing widespread worries about potential negative economic consequences. Additionally, persistent inflation anxieties, elevated price levels across essential spending categories, tariff uncertainty, and a cooling labor market have collectively created an environment of profound pessimism. Year-over-year, consumer sentiment has collapsed by approximately 30% from November 2024 levels of 71.8 points, illustrating the magnitude of confidence erosion. The Current Economic Conditions Index fell to 52.3 points in November 2025—the lowest level in the index’s history dating back to 1951—while the Consumer Expectations Index dropped to 49.0 points, underscoring deep-seated concerns about future economic prospects that permeate American households across virtually all demographic segments.

Key Facts About Consumer Sentiment Index in the US in 2025

Data Source: University of Michigan Surveys of Consumers, Federal Reserve Bank of St. Louis FRED Database

The data presented in this comprehensive table reveals the extraordinary depth of the consumer sentiment crisis facing the United States in 2025. The overall Consumer Sentiment Index registered 50.3 points in November, representing a precipitous 6.2% monthly decline from October’s 53.6 points and a staggering 29.9% year-over-year collapse from 71.8 points in November 2024. This November reading ranks at the 0th percentile of the 575 monthly data points collected since 1978, meaning it represents the absolute bottom of the distribution—worse than 99.8% of all historical readings. The index now sits 40.3% below its arithmetic mean of 84.2 points, illustrating how far sentiment has deviated from long-term norms.

The bifurcation between current conditions and future expectations reveals important nuances in consumer psychology. The Current Economic Conditions Index plunged to 52.3 points in November 2025, marking the lowest level in the index’s entire history extending back to 1951 and representing a 10.8% monthly decline. This component, which reflects consumers’ assessments of their present financial situation and current business conditions, dropped 18.2% year-over-year, indicating that Americans perceive their immediate economic circumstances as severely deteriorated. Meanwhile, the Consumer Expectations Index fell to 49.0 points, declining 2.6% monthly and 36.3% year-over-year, demonstrating that forward-looking pessimism has intensified even more dramatically than assessments of current conditions.

The granular components driving November’s decline underscore the breadth of consumer distress. Current personal finances experienced a devastating 17% drop in November, the sharpest monthly deterioration recorded, as households grappled with stagnating incomes, elevated living costs, and uncertainty surrounding the government shutdown’s impacts. Year-ahead expected business conditions declined 11%, reflecting pervasive concern that economic conditions will worsen rather than improve over the coming twelve months. These dramatic declines were widespread across the population, affecting consumers across age groups, income levels, and political affiliations, with one notable exception—those in the highest tercile of stock holdings posted an 11% sentiment increase, buoyed by continued equity market strength despite broader economic concerns.

Consumer Sentiment Index Monthly Trends in the US in 2025

Data Source: University of Michigan Surveys of Consumers, FRED Economic Data

The monthly trajectory of the US Consumer Sentiment Index throughout 2025 charts a story of relentless decline interrupted by brief periods of stabilization and modest recovery. The year commenced at 71.1 points in January, already 4.0% below December 2024’s level of 74.0 points, marking the first decline in six months and foreshadowing the challenging year ahead. February witnessed an alarming 6.8-point plunge to 64.3, followed by March’s additional 6.4-point drop to 57.9, as escalating tariff announcements and trade policy uncertainty triggered widespread consumer anxiety. April’s 5.7-point decline brought the index to 52.2 points, representing the nadir of the spring collapse and the lowest reading since July 2022 when inflation was peaking.

May 2025 marked an inflection point, as sentiment stabilized at 52.2 points, unchanged from April despite preliminary readings suggesting further deterioration. This stabilization occurred following the May 12th announcement of a temporary US-China trade deal that paused some of the heaviest proposed tariffs, providing relief from the worst-case scenarios consumers had been anticipating. The latter half of May saw improvement in expected business conditions as trade policy uncertainty temporarily abated, though these positive developments were offset by continued declines in current personal finances stemming from stagnating incomes. June brought a modest 4.2-point rebound to 56.4, and July extended gains with an additional 2.1-point increase to 58.5 points, representing the highest level since February and offering hope that sentiment had bottomed.

However, this summer recovery proved ephemeral and incomplete. August saw sentiment tick down 0.3 points to 58.2, marking the first decline in four months and signaling that the upward momentum had stalled. September’s 3.1-point drop to 55.1 initiated a new phase of deterioration that would accelerate into autumn. October brought another 1.5-point decline to 53.6, and November’s devastating 3.3-point collapse to 50.3 represented the culmination of mounting pressures, particularly the ongoing government shutdown. Throughout this eleven-month period, the Current Economic Conditions Index traced a similarly grim path, falling from 76.2 points in January to 52.3 in November—a 31.4% decline that established a new all-time low. The Consumer Expectations Index proved even more volatile, plummeting from 67.8 points in January to 49.0 in November, a 27.7% drop that left future outlook deeply pessimistic across the American population.

Current Economic Conditions vs Future Expectations Divergence in the US in 2025

Data Source: University of Michigan Surveys of Consumers Monthly Reports

The relationship between the Current Economic Conditions Index and the Consumer Expectations Index in 2025 reveals a troubling pattern where both present assessments and future outlooks have deteriorated simultaneously, creating a rare confluence of pessimism across temporal horizons. The Current Economic Conditions Index collapsed to 52.3 points in November 2025, establishing the lowest reading in the index’s seventy-four-year history dating back to 1951. This unprecedented low reflects consumers’ harsh judgments about their present financial circumstances, with assessments of current personal finances experiencing a catastrophic 17% monthly decline in November—the sharpest single-month deterioration on record—as households confronted the reality of stagnating incomes, persistent high prices, and uncertainty about government services and payments during the shutdown.

The breakdown of current condition assessments reveals widespread distress across multiple dimensions. Consumers’ evaluations of present business conditions have deteriorated sharply, with the percentage characterizing conditions as “good” declining to multi-year lows while those describing conditions as “bad” have increased substantially. Current buying conditions for major household items, automobiles, and homes are viewed as particularly unfavorable, with consumers citing high prices, elevated interest rates, and general economic uncertainty as key deterrents. The assessment of current personal financial situations relative to one year ago showed marked worsening in November, with a growing proportion of households reporting that their finances had deteriorated rather than improved, reflecting the cumulative impact of inflation on purchasing power and the failure of income growth to keep pace with cost increases.

The Consumer Expectations Index painted an equally bleak picture at 49.0 points in November, marking the fifth consecutive monthly decline and representing a 36.3% year-over-year plunge from 77.3 points in November 2024. This forward-looking component captures consumers’ outlook for the next twelve months across personal finances, business conditions, and employment prospects, and the 2025 readings suggest profound pessimism about the economic future. Year-ahead expected business conditions fell 11% in November alone, as consumers increasingly anticipated that economic circumstances would worsen rather than stabilize or improve. The government shutdown emerged as the dominant factor driving this deterioration, with consumers expressing explicit worries about potential negative consequences for economic growth, employment, and their own financial wellbeing.

Expected personal finances showed particular weakness, with declining proportions of consumers anticipating income increases over the coming year and growing numbers expecting financial circumstances to worsen or remain stagnant. Buying intentions for major purchases reflected this pessimism, with plans for home purchases, automobile acquisitions, and big-ticket appliance investments all showing weakness or outright declines. Interest rate expectations contributed to the gloomy outlook, with over 50% of consumers anticipating higher rates over the next twelve months, creating concerns about borrowing costs for mortgages, auto loans, and credit card debt. The alignment of deteriorating current conditions and pessimistic future expectations creates a particularly dangerous economic dynamic, as consumers experiencing present difficulties and anticipating future worsening become highly risk-averse, curtailing discretionary spending and major purchase decisions in ways that can become self-fulfilling prophecies of economic slowdown.

Inflation Expectations and Price Concerns in the US in 2025

Data Source: University of Michigan Surveys of Consumers, Federal Reserve Bank of New York Survey of Consumer Expectations

Inflation concerns and price anxieties have been the single most dominant driver of deteriorating consumer sentiment throughout 2025, with survey participants consistently citing high prices, cost of living pressures, and purchasing power erosion as their primary economic worries. Year-ahead inflation expectations stood at 4.7% in November 2025, ticking up slightly from 4.6% in October and remaining well above the Federal Reserve’s 2% target but substantially below the peak of 7.3% recorded in May during the height of tariff-related panic. The May surge in inflation expectations followed major tariff announcements in April, with nearly 75% of consumers spontaneously mentioning tariffs in survey responses, up from 60% in April, reflecting widespread concern that import barriers would translate directly into higher consumer prices across broad categories of goods.

The trajectory of inflation expectations throughout 2025 traced the policy uncertainty and economic developments of the year. January began with year-ahead expectations at 3.3%, representing a significant jump from December 2024’s 2.8% as consumers absorbed the implications of new administration policies. February through April saw relentless increases, with expectations surging from 4.0% to 6.5% to 7.3%, the fastest quarterly acceleration in inflation expectations since the early 1980s. This dramatic spike reflected not just current price pressures but forward-looking anxiety about tariff impacts, with consumers anticipating that trade barriers would increase costs for electronics, clothing, household goods, and automobiles. The May 12th announcement of a temporary US-China trade deal provided relief, with expectations moderating to 6.6% by month’s end as worst-case scenarios receded.

Summer months brought continued moderation, with year-ahead inflation expectations declining to 5.8% in June, 5.3% in July, 5.0% in August, and 4.8% in September as actual inflation data showed continued deceleration and some tariff threats were walked back or delayed. However, expectations remained stubbornly elevated relative to both the Federal Reserve’s target and pre-pandemic norms, indicating that consumers had not yet regained confidence in price stability. October and November saw expectations stabilize in the 4.6-4.7% range, elevated but no longer accelerating, as the government shutdown displaced tariffs as the primary concern dominating survey responses.

Long-run inflation expectations—measuring anticipated price increases over the next five to ten years—showed greater stability, standing at 3.6% in November 2025, down from 3.9% in October and below the 2025 peak of 4.2% recorded in April. This decline in long-term expectations from recent highs suggests some anchoring of inflation psychology, with consumers not fully extrapolating recent price pressures indefinitely into the future. Nevertheless, the 3.6% reading remains above the 2.3-3.0% range that characterized the two years prior to the pandemic, indicating that even long-term inflation expectations have been durably elevated by the 2021-2023 inflation surge and subsequent price level increases.

The persistent focus on inflation and high prices in consumer write-in responses throughout 2025 underscores how deeply cost-of-living concerns have penetrated American household psychology. Survey participants frequently referenced specific categories experiencing acute price pressures: gasoline prices that remain volatile and elevated relative to pre-pandemic levels, food costs that have risen dramatically with grocery bills consuming larger shares of household budgets, medical care expenses that continue climbing faster than general inflation, and housing costs including both rents and home prices that have reached crisis levels of unaffordability. Perhaps most significantly, consumers distinguished between inflation rates and price levels—even as the rate of price increases moderated from 2022 peaks, the cumulative effect of years of above-target inflation meant that price levels remained dramatically higher than in 2019, and incomes had not kept pace with this adjustment. This disconnect between moderating inflation rates and persistently high price levels explains why consumer sentiment remained deeply depressed even as official inflation metrics improved, as households continued experiencing financial strain from the elevated baseline of costs across essential spending categories.

Government Shutdown Impact on Consumer Sentiment in the US in 2025

Data Source: University of Michigan Surveys of Consumers, Congressional Budget Office, Federal Employment Data

The federal government shutdown that began in early October 2025 emerged as the defining factor driving consumer sentiment to near-record lows in November, with survey director Joanne Hsu explicitly stating that “with the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy.” The shutdown’s impact on consumer sentiment has been both direct—through effects on federal workers and benefit recipients—and indirect through broader uncertainty about economic policy, data availability, and the functioning of government services that millions of Americans depend upon. November’s 6.2% monthly sentiment decline represented the largest single-month drop since August 2022 and was directly attributable to escalating shutdown concerns.

The direct impacts of the shutdown affected substantial segments of the population. An estimated 750,000 federal government workers were furloughed during the shutdown, representing approximately 0.4% of the civilian labor force as of August 2025 employment data. These workers experienced immediate financial hardship as paychecks were suspended, forcing difficult decisions about bill payments, mortgage or rent obligations, and essential spending. The ripple effects extended far beyond direct federal employment, as government contractors, vendors, and businesses dependent on federal spending also experienced payment delays and revenue interruptions. Survey responses in November frequently referenced the shutdown as a source of personal financial stress, with affected households reporting severe difficulties meeting financial obligations.

The shutdown’s impacts on benefit programs created additional hardship and anxiety, particularly among lower-income households. SNAP (Supplemental Nutrition Assistance Program) benefits experienced delays and reductions across multiple states as administrative functions were suspended, creating food security concerns for millions of vulnerable Americans who depend on this assistance for basic nutrition. Survey participants in lower-income brackets expressed acute worry about the continuation and reliability of government benefit programs, with uncertainty about whether and when payments would resume adding to broader financial stress. The suspension of other government services—from Social Security Administration functions to IRS operations to regulatory activities—created cascading uncertainties for households navigating these systems.

Perhaps equally significant was the shutdown’s impact on economic information and policy certainty. All federal economic data compilation and releases were suspended beginning in early October, leaving policymakers, businesses, investors, and households operating with incomplete and outdated information about current economic conditions. Traditional monthly releases like employment reports, inflation data, GDP estimates, and industry-specific indicators ceased publication, creating an information vacuum that amplified uncertainty. This data suspension elevated the importance of private-sector surveys like the University of Michigan Consumer Sentiment Index, which continued operating and became the primary real-time gauge of economic conditions during the blackout period.

The psychological impact of the shutdown extended across the entire population, not just those directly affected. Consumers expressed concern that the shutdown signaled broader governmental dysfunction and political instability, creating doubts about economic management and policy coordination. The extended duration—surpassing one month by early November—intensified these concerns, as initial hopes for quick resolution gave way to recognition that the impasse was deep and potentially long-lasting. Survey participants across demographic groups cited the shutdown as evidence of economic and political uncertainty, contributing to decisions to defer major purchases, reduce discretionary spending, and adopt more conservative financial postures. The fact that sentiment declined broadly across age groups, income levels, and political affiliations underscored the shutdown’s universal negative impact, transcending partisan divisions in its effects on household confidence.

Demographic Variations in Consumer Sentiment in the US in 2025

Data Source: University of Michigan Surveys of Consumers Demographic Breakdowns, Morning Consult Index

The consumer sentiment landscape in 2025 has been characterized by significant demographic variations, with income level emerging as the most powerful predictor of confidence trajectories. Lower-income consumers earning under $50,000 annually experienced the most severe sentiment deterioration throughout the year, with this cohort reaching its lowest confidence levels since July 2024 and maintaining persistently depressed readings through November. These households face disproportionate impacts from inflation, as essential spending categories like food, gasoline, and housing—which have experienced above-average price increases—consume larger shares of their budgets, leaving little room for discretionary spending or savings accumulation. The government shutdown’s effects on SNAP benefits and federal employment particularly affected this income bracket, compounding existing financial pressures.

Middle-income households earning $50,000-$100,000 showed below-average sentiment throughout 2025, though generally faring somewhat better than their lower-income counterparts. This group experienced significant pressure from housing costs, whether mortgage payments on recently purchased homes at elevated rates or rents that have climbed sharply, combined with transportation costs for commuting and family obligations. While possessing greater financial buffers than lower-income households, middle-income consumers expressed concern about stagnating wages failing to keep pace with cost-of-living increases and worries about future job security as labor market conditions cooled. Higher-income consumers earning over $100,000 maintained relatively better sentiment, though still experiencing declines from 2024 levels, benefiting from stronger wage growth, greater financial flexibility, and typically lower debt burdens as percentages of income.

The stark exception to declining sentiment trends across income levels appeared among consumers in the top tercile of stock holdings, who posted a remarkable 11% sentiment increase in November 2025 even as the broader population experienced the 6.2% decline that brought overall sentiment to near-record lows. This divergence reflects the powerful wealth effect from equity market performance, which remained strong through much of 2025 despite economic uncertainties. Affluent households with substantial stock portfolios benefited from capital appreciation that offset other concerns, creating a fundamentally different economic experience than that of households without significant market exposure. This bifurcation between asset holders and non-holders underscores growing inequality in economic outcomes and sentiment.

Age-based variations revealed distinct generational patterns. Younger consumers under 35 experienced declining sentiment in multiple periods throughout 2025, including October, facing unique challenges including student loan obligations, difficulty entering the housing market due to affordability constraints, and greater vulnerability to labor market cooling as less-established workers. Middle-aged consumers between 35 and 54 showed modest improvement in some months, benefiting from more established careers, accumulated savings, and typically peak earning years that provided some insulation from economic headwinds. Older consumers age 55 and above demonstrated declining sentiment driven by concerns about retirement savings adequacy, the impact of inflation on fixed incomes, and anxiety about healthcare costs and availability.

Gender differences in sentiment reached historic proportions in 2025, with women’s confidence levels falling to their lowest in nearly two years while men’s sentiment experienced more modest deterioration. This unprecedented gap may reflect differential impacts of economic uncertainty on household management responsibilities traditionally falling more heavily on women, caregiving burdens, and potentially greater vulnerability to government shutdown effects on benefit programs and services. Political affiliation showed complex patterns, with Republicans experiencing notable declines in certain months like May (down 7%) despite general support for administration policies, Democrats maintaining persistently pessimistic outlooks amid economic concerns, and Independents showing the most variable patterns with improvements in some periods. These demographic variations underscore that consumer sentiment is not monolithic but represents vastly different experiences across the American population.

Buying Conditions and Major Purchase Intentions in the US in 2025

Data Source: University of Michigan Surveys of Consumers, Conference Board Consumer Confidence Survey®

Assessments of buying conditions and major purchase intentions throughout 2025 reflected the broader pessimism pervading consumer sentiment, with households demonstrating heightened caution about discretionary spending and major financial commitments. Home buying conditions were consistently rated as very poor throughout the year, with consumers citing the combination of elevated home prices, high mortgage rates in the 6-7% range, and limited inventory as creating an affordability crisis that priced many potential buyers out of the market entirely. Home purchase plans weakened in October 2025, continuing a pattern of depressed housing demand despite the six-month trend showing some modest improvement from the extremely suppressed levels of spring 2025. First-time buyers faced particularly daunting conditions, with entry-level homes increasingly unaffordable even for dual-income households with stable employment.

Automobile purchasing plans showed more nuanced patterns, with October 2025 bringing an increase in overall vehicle purchase intentions driven primarily by plans to buy used cars rather than new vehicles. This shift toward the used market reflected consumers’ value-consciousness and efforts to minimize expenditures while still meeting transportation needs. New vehicle purchase plans remained weak throughout 2025, as elevated prices resulting from supply chain constraints, dealer markups, and vehicle content upgrades combined with higher auto loan rates to push monthly payments beyond comfortable levels for many households. The average new vehicle transaction price remained near all-time highs, while used vehicle prices—though moderating from pandemic peaks—stayed elevated relative to historical norms.

Big-ticket appliance and electronics purchasing plans demonstrated considerable month-to-month variation, indicating uncertainty and opportunistic buying behavior rather than consistent demand. Consumers showed willingness to purchase appliances when necessary but deferred non-essential replacements or upgrades, waiting for promotional periods or perceiving better value. Electronics purchases remained below average throughout 2025, with tariff concerns creating uncertainty about future prices and availability, leading some consumers to either accelerate purchases to beat potential price increases or defer them hoping for resolution of trade policy uncertainty. Survey data showed little evidence of widespread advance purchasing ahead of tariffs despite some consumers beginning holiday shopping as early as the first quarter, suggesting that most households maintained normal buying timelines despite policy uncertainties.

Vacation plans continued their downward trajectory that began at the start of 2025, with consumers expressing reduced intentions for leisure travel amid cost concerns and broader economic uncertainty. Transportation costs including airfare and gasoline, accommodation expenses, and overall trip budgets became less affordable relative to household incomes, leading many families to scale back or eliminate vacation plans. Dining out intentions showed greater resilience, with consumers indicating continued plans for restaurant spending though likely at reduced frequency or by trading down to less expensive establishments. This reflected dining out’s role as a more accessible and scalable discretionary category compared to major purchases or travel.

The overall assessment of buying conditions reached near-record lows in 2025, with consumers characterizing the present as a “bad time to buy” across virtually all major categories. This pervasive negativity about purchasing conditions reflected not just current affordability challenges but also uncertainty about future prices, incomes, and economic conditions that made households reluctant to commit to major expenditures. Holiday spending intentions epitomized this caution, with preliminary data suggesting consumers expected to spend 3.9% less on gifts and 12% less on non-gift items compared to 2024, representing significant pullbacks in discretionary consumption. The prevailing mindset of financial conservatism, driven by weak consumer sentiment, created substantial headwinds for retailers, automakers, homebuilders, and the broader economy dependent on consumer spending for approximately 70% of GDP.

Personal Finance Assessments and Income Expectations in the US in 2025

Data Source: University of Michigan Surveys of Consumers, Federal Reserve Consumer Finances Data

Personal finance assessments reached crisis levels in November 2025, with the current personal finances component of the consumer sentiment index experiencing a catastrophic 17% monthly decline—the sharpest single-month drop in the survey’s history. This unprecedented deterioration reflected the convergence of multiple pressures: stagnating incomes failing to keep pace with elevated living costs, the immediate financial shock of the government shutdown affecting federal workers and benefit recipients, uncertainty about future income prospects, and the cumulative psychological toll of sustained economic stress throughout the year. When consumers were asked to compare their current financial situation to one year prior, a declining percentage reported improvement while a rising percentage indicated their finances had worsened, marking a significant shift from more balanced assessments earlier in 2025 and in 2024.

The erosion of personal financial security manifested across multiple dimensions. Income growth expectations remained subdued throughout 2025, with consumers anticipating wage increases that would fall short of inflation expectations across most spending categories. This anticipated purchasing power decline created persistent anxiety about financial trajectories, as households recognized that even maintaining current living standards would become increasingly difficult without accelerating income growth. The reality of wage stagnation or modest growth became particularly acute for workers in industries experiencing slower growth or facing restructuring pressures, with many survey respondents expressing frustration that employment stability had not translated into meaningful income gains that would restore affordability for essential goods and services.

Savings behavior reflected the financial squeeze facing American households in 2025. The household savings rate showed a declining trend as consumers drew down accumulated pandemic-era savings to maintain consumption levels amid the mismatch between income and expenses. Many households reported emergency fund adequacy below the recommended three-to-six months of expenses, creating financial vulnerability and contributing to anxiety about unexpected costs such as medical bills, vehicle repairs, or home maintenance. The depletion of savings buffers that had provided confidence and security during the post-pandemic recovery left households feeling more exposed to economic shocks and less able to weather income disruptions or unexpected expenses. This reduced financial cushion directly contributed to declining confidence, as the safety net that enables risk-taking and discretionary spending eroded.

Debt service burdens increased for many households in 2025, driven by elevated interest rates on credit cards, auto loans, and other consumer debt. Credit card balances reached all-time highs, with many consumers relying on revolving credit to bridge gaps between income and necessary expenses. At average APRs exceeding 22% for accounts accruing interest and 24% for new offers, carrying balances became extraordinarily expensive, with minimum payments consuming larger shares of monthly income and creating debt spirals for vulnerable households. Delinquency rates climbed across credit categories, with credit card delinquencies reaching levels not seen since 2011 and indicating that growing numbers of consumers were struggling to meet financial obligations despite relatively low unemployment.

Forward-looking personal finance expectations proved equally pessimistic, with consumers anticipating that their financial situations would fail to improve or would actively deteriorate over the coming year. The percentage expecting personal finances to improve declined while those anticipating worsening increased, creating a net-negative outlook that naturally translated into conservative spending behavior and reduced major purchase intentions. Survey participants frequently cited concerns about potential job loss, stagnant wages, rising living costs, and broader economic uncertainty as factors driving their pessimistic personal finance outlook. This combination of deteriorating current assessments and pessimistic future expectations created a powerful downward force on overall consumer sentiment and positioned household finances as a central driver of the broader confidence crisis gripping the nation in 2025.

Labor Market Confidence and Employment Outlook in the US in 2025

Data Source: U.S. Bureau of Labor Statistics, Federal Reserve Banks, University of Michigan Surveys of Consumers

Labor market confidence and employment outlook emerged as critical factors influencing consumer sentiment throughout 2025, with perceptions of job availability, security, and wage growth prospects all deteriorating despite official unemployment rates remaining relatively low by historical standards. Consumer assessments of current labor market conditions showed consistent weakening, with the percentage characterizing jobs as “plentiful” declining steadily from 32.5% at the beginning of 2025 to 29.7% by August, while those reporting jobs as “hard to get” increased from 14.5% to 20.0% over the same period. This shift in perception reflected the cooling labor market dynamics of 2025, as job creation slowed dramatically and hiring freezes or workforce reductions spread across sectors.

The official unemployment rate stood at 4.3% as of August 2025, representing a modest increase from the lows of 3.4% seen in 2023 but still historically reasonable by pre-pandemic standards. However, this aggregate statistic masked important underlying trends that contributed to weakening employment confidence. Nonfarm payroll employment showed minimal growth, adding just 22,000 jobs in August with little change since April, indicating that job creation had stalled. This near-zero employment growth represented a dramatic deceleration from the robust gains of 2021-2023 and signaled that the labor market had shifted from tight conditions favoring workers to looser conditions favoring employers. Layoff announcements increased across industries including technology, finance, retail, and manufacturing, though many did not yet show up in official unemployment statistics as affected workers found new positions or exited the labor force.

Forward-looking employment expectations proved particularly pessimistic in 2025. The mean perceived probability that consumers would lose their jobs within the next twelve months increased to 14.9% in September, above the trailing 12-month average of 14.1% and reflecting heightened job security concerns. Simultaneously, the mean perceived probability of finding a new job within three months if one’s current position was lost rebounded only modestly to 47.4% in September after hitting a series low of 44.9% in August, remaining well below the 12-month average of 51.0%. This combination—higher expected job loss probability combined with lower expected reemployment probability—created a toxic mix for consumer confidence, as households perceived employment as increasingly precarious with fewer safety nets.

The probability that consumers expected the unemployment rate to be higher one year from now increased to 42.5% in October 2025, marking the third consecutive monthly increase and indicating growing recession concerns. This rising unemployment expectation directly correlated with weakening overall consumer sentiment, as anticipated job market deterioration naturally suppresses spending intentions and confidence. Consumers across demographic groups expressed worry about potential layoffs, with younger workers and those in industries experiencing disruption showing particular vulnerability. Even employed consumers with stable positions demonstrated reduced confidence due to concerns about colleagues’ job losses, frozen hiring that limited career advancement opportunities, and diminished bargaining power for raises or improved working conditions.

Wage growth expectations remained subdued at 2.6% for the year ahead as of October 2025, below the trailing 12-month average of 2.7% and, more importantly, below inflation expectations of 4.7% for the same time horizon. This anticipated wage-inflation gap meant that consumers expected real incomes to decline, directly eroding purchasing power and explaining persistent negative assessments of personal finance trajectories. Survey participants frequently noted that while they remained employed, modest or nonexistent raises failed to restore affordability that had been lost during the 2021-2023 inflation surge. The labor force participation rate of 62.4% as of May 2025 showed some workers dropping out of job searches entirely, potentially indicating discouragement about employment prospects or withdrawal due to caregiving responsibilities, disability, or early retirement considerations.

Regional Economic Disparities in Consumer Sentiment in the US in 2025

Data Source: Regional Federal Reserve Bank Reports, State Consumer Sentiment Surveys, University of Michigan Regional Analysis

Regional variations in consumer sentiment across the United States in 2025 demonstrated substantial geographic disparities reflecting localized economic conditions, industry concentrations, and differential exposure to the year’s major economic disruptions. The Mid-Atlantic region, particularly the Washington D.C. metropolitan area and surrounding Maryland and Northern Virginia counties, experienced the most severe sentiment deterioration due to the federal government shutdown’s concentrated impact. With approximately 750,000 federal workers furloughed and this workforce heavily concentrated in the national capital region, entire communities faced simultaneous income loss, creating cascading effects through local businesses, services, and real estate markets dependent on government employee spending. Survey responses from this region showed acute financial distress and uncertainty about shutdown duration and back-pay prospects.

The Southeast region generally maintained above-average sentiment relative to national levels throughout 2025, supported by continued population inflows from higher-cost areas, robust job growth in manufacturing and logistics sectors, and housing markets that remained more affordable than coastal alternatives. States including Florida, Tennessee, North Carolina, Georgia, and South Carolina benefited from corporate relocations, distribution center development, and service sector expansion supporting employment and income growth. However, even these relatively stronger regions experienced sentiment declines from 2024 levels as national economic concerns permeated local outlooks, and inflation pressures on food, gasoline, and other essentials affected households across all geographies.

The Midwest region faced particular challenges in 2025 due to manufacturing sector uncertainty driven by tariff policies and trade tensions. States heavily dependent on automotive production and related supply chains—including Michigan, Ohio, Indiana, and Wisconsin—experienced heightened anxiety about production disruptions, supply cost increases, and potential demand destruction from higher vehicle prices. Agricultural states within the broader Midwest and Great Plains—such as Iowa, Kansas, Nebraska, and the Dakotas—confronted commodity price volatility, elevated input costs for seeds, fertilizer, and fuel, and trade policy impacts on export markets particularly for soybeans, corn, wheat, and livestock products. Rural communities dependent on agricultural economics showed particularly depressed sentiment as farm income pressures created ripple effects through small-town businesses and services.

The West Coast maintained below-average sentiment throughout 2025, with California, Oregon, and Washington facing headwinds from technology sector workforce reductions, extraordinarily high housing costs constraining household budgets, and state fiscal challenges. The technology industry concentration in Silicon Valley, Seattle, and other coastal hubs meant that layoff announcements from major tech firms and startups facing funding difficulties disproportionately affected regional employment and income. Housing affordability reached crisis levels, with median home prices and rents consuming unsustainable shares of household income even for well-compensated professionals, forcing difficult trade-offs between housing and other spending categories or driving migration to more affordable regions.

The Pacific Northwest specifically faced additional pressures from Boeing’s ongoing production and quality challenges affecting aerospace employment and supplier networks throughout Washington state. The Southwest region showed variable sentiment by state, with energy-producing areas in Texas, Oklahoma, and New Mexico experiencing volatility tied to oil and gas price fluctuations, while technology hubs in Austin and other cities faced similar challenges to coastal markets. The Mountain West presented mixed performance, with technology presence in areas like Utah providing some resilience but housing affordability constraints in Colorado, Idaho, and Montana creating consumer stress. The Sun Belt broadly benefited from population growth supporting construction, real estate, and services, though rapid growth also strained infrastructure and created affordability pressures in previously inexpensive markets. These pronounced regional disparities underscored that consumer sentiment in 2025 was not uniform but reflected vastly different local economic realities across American geography.

Housing Affordability Crisis and Consumer Sentiment in the US in 2025

Data Source: University of Michigan Surveys of Consumers, Federal Reserve Bank of New York, National Association of Realtors

The housing affordability crisis reached unprecedented severity in 2025, emerging as one of the most significant drivers of depressed consumer sentiment and a fundamental constraint on household formation, geographic mobility, and economic confidence. Consumer assessments of home buying conditions consistently ranked among the worst in the survey’s history, with households citing the combination of elevated home prices, mortgage rates in the 6-7% range, and limited inventory as creating insurmountable barriers to homeownership for vast swaths of the population. The contrast between the sub-3% mortgage rates available during 2020-2021 and current rates represented a doubling or tripling of borrowing costs, translating to dramatically higher monthly payments for any given home price and effectively pricing millions of potential buyers out of the market.

Home price expectations remained positive despite affordability challenges, with consumers anticipating 3.8% appreciation over the next year as of September 2025. This expectation of continued price increases reflected persistent supply constraints from underbuilding during the decade following the 2008 financial crisis, demographic demand from millennials entering peak homebuying years, and limited inventory as existing homeowners with low locked-in mortgage rates proved reluctant to sell and take on higher borrowing costs. While these appreciation expectations were more moderate than the double-digit annual gains of 2020-2022, they nonetheless signaled that affordability would continue worsening as prices outpaced wage growth, creating a deepening crisis for aspiring homeowners.

The impact on first-time buyers proved particularly severe, with sentiment in this crucial segment reaching its lowest level since 2022 during the third quarter of 2025. Young adults and first-time buyers faced the perfect storm of high prices, elevated rates, and stringent lending standards requiring substantial down payments and strong credit profiles. Many responded by delaying household formation entirely, with increasing numbers continuing to live with parents or roommates well into their thirties rather than purchasing or even renting independent housing. This delayed household formation represented not just individual frustration but broader economic costs, as residential construction, furniture and appliance purchases, home improvement spending, and related economic activity failed to materialize from a generation unable to access homeownership.

Rent increase expectations painted an even more challenging picture for non-homeowners, with consumers anticipating 7.0% annual rent growth as of September 2025—substantially above general inflation expectations and far exceeding typical wage growth. This steep anticipated increase in rental costs directly threatened household budgets, forcing difficult trade-offs between housing and other essential spending categories like food, healthcare, transportation, and savings. Many renters found themselves dedicating 30% or more of gross income to housing costs, exceeding the traditional affordability threshold and leaving inadequate resources for other needs. The rental affordability crisis particularly affected lower and middle-income households concentrated in high-cost metropolitan areas where employment opportunities existed but housing costs consumed unsustainable budget shares.

The bifurcation between homeowners and renters created starkly different consumer sentiment trajectories. Existing homeowners, particularly those who purchased or refinanced during the low-rate environment of 2020-2021, benefited from locked-in affordable housing payments and accumulated home equity from appreciation, creating a wealth effect that supported their confidence and spending capacity. Many homeowner households with fixed low-rate mortgages saw housing as their most successful financial decision, with monthly payments well below what renting or buying would currently cost. However, this benefit came with the cost of reduced mobility, as moving plans remained below historical averages throughout 2025 due to reluctance to surrender favorable mortgage terms—creating labor market rigidities as workers became less able to relocate for better employment opportunities.

The psychological impact of the housing crisis on consumer sentiment extended beyond immediate affordability concerns to broader questions about economic opportunity and the American dream. Survey participants frequently expressed frustration that despite stable employment, responsible financial behavior, and professional achievement, homeownership remained unattainable—contradicting deeply held expectations about middle-class financial security. This disconnect between traditional markers of economic success and actual housing access contributed to broader disillusionment about economic prospects that permeated 2025 sentiment readings. The housing affordability crisis thus represented not just a sectoral challenge but a fundamental drag on consumer confidence, quality of life, and economic dynamism.

Credit Conditions and Financial Stress Indicators in the US in 2025

Data Source: Federal Reserve Bank of New York Consumer Credit Panel/Equifax, Federal Reserve G.19 Consumer Credit Report

Credit conditions and financial stress indicators revealed mounting pressure on American household balance sheets throughout 2025, directly contributing to deteriorating consumer sentiment as debt burdens increased and delinquency rates climbed to levels not seen since the aftermath of the Great Recession. Total household debt reached $18.20 trillion in the first quarter of 2025, representing a 2.9% year-over-year increase and continuing the upward trajectory that has characterized the post-pandemic period. Credit card debt specifically hit $1.233 trillion by the third quarter, marking an all-time high as consumers increasingly relied on revolving credit to maintain living standards amid the gap between stagnating incomes and elevated costs.

The most alarming development in 2025 credit markets was the sharp deterioration in delinquency rates across multiple loan categories. The credit card delinquency rate for balances 90 or more days past due surged to 12.3% in the first quarter of 2025, representing an 8.5% increase from the fourth quarter of 2024 and reaching the highest level since the first quarter of 2011 during the economic recovery from the financial crisis. This dramatic spike in serious credit card delinquencies signaled that growing numbers of households were unable to meet minimum payment obligations, indicating severe financial distress. The overall delinquency rate across all debt categories rose to 4.3% in the first quarter, up from 3.6% in the fourth quarter of 2024, demonstrating that payment difficulties extended beyond credit cards to auto loans, student loans, and other consumer debt.

Demographic disparities in credit stress mirrored broader patterns in consumer sentiment, with younger borrowers experiencing particularly acute difficulties. Consumers under 30 years old posted serious credit card delinquency rates of 10.3% in the first quarter of 2025, marking a 4.4% increase from a year earlier and reflecting the unique vulnerabilities of younger adults facing student debt obligations, entry-level wages insufficient to cover elevated living costs, and limited credit histories that constrained access to favorable borrowing terms. Student loan delinquency rates for balances 90+ days past due spiked dramatically to 7.74% in the first quarter, up from just 0.53% in the fourth quarter of 2024, as pandemic-era forbearance programs ended and borrowers resumed repayment obligations many found difficult to meet alongside other financial commitments.

The high-interest-rate environment compounded debt stress throughout 2025, making borrowing extraordinarily expensive and trapping households in debt spirals. The average credit card APR for accounts accruing interest climbed to 22.83% in the third quarter, while new credit card offers averaged 24.04% APRs as of October. At these elevated rates, carrying balances became financially crushing, with consumers making only minimum payments facing decades of repayment timelines and paying multiple times the original purchase price in interest charges. While 54% of cardholders paid balances in full monthly and thereby avoided interest, the remaining 46% who carried balances faced mounting financial pressure as interest charges compounded and available credit limits diminished.

The intersection of elevated debt levels, rising delinquencies, and high borrowing costs created a vicious cycle undermining consumer sentiment and spending capacity. As households dedicated larger income shares to debt service, discretionary spending necessarily declined, constraining economic growth. Rising delinquencies prompted lenders to tighten credit standards, reducing credit availability precisely when struggling households might have relied on it to weather temporary income disruptions or unexpected expenses. The psychological burden of debt stress—worrying about making payments, dealing with collection calls, and facing damaged credit scores—directly contributed to the personal finance deterioration and pessimistic outlook that characterized 2025 consumer sentiment readings. Credit stress represented not just a financial challenge but a fundamental threat to household wellbeing and economic confidence that permeated virtually all dimensions of consumer psychology in 2025.

Disclaimer: This research report is compiled from publicly available sources. While reasonable efforts have been made to ensure accuracy, no representation or warranty, express or implied, is given as to the completeness or reliability of the information. We accept no liability for any errors, omissions, losses, or damages of any kind arising from the use of this report.

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