NEW YORK — Consumer sentiment dropped to a three-year low and close to the lowest point ever recorded by the University of Michigan one month into the government shutdown, with pessimism over personal finances and anticipated business conditions weighing on Americans.
The November survey showed the index of consumer sentiment at 50.4, down a startling 6.2% from last month and it plunged nearly 30% from a year ago.
Economists were caught off guard. Those polled had expected a slight month-to-month increase for a reading of 54.2.
“With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy,” said Joanne Hsu, Surveys of Consumers Director at University of Michigan. “This month’s decline in sentiment was widespread throughout the population, seen across age, income, and political affiliation.”
The one exception, Hsu said, were those with large stock holdings. Big tech companies, particularly in artificial intelligence, have driven explosive returns for investors. The tech-heavy Nasdaq is up 17% this year.
“The top 20% of households by income drive 40% of consumer spending, and we think the wealth effect from the buoyant stock market has strengthened this year,” according to Michael Pearce, d
