Consumer sentiment in the United States has fallen to levels not seen in modern history, according to the nation's longest-running consumer sentiment survey run by Joanne Hsu at the University of Michigan, which dates back to 1946. The decline has affected Democrats, Independents and Republicans alike, with all three groups feeling worse about the economy under the current administration than they did during the first Trump presidency. Hsu said the key problem is that "wages not keeping up with inflation" is preventing people from getting ahead financially.
The share of consumers expecting their wages to grow faster than inflation dropped sharply to just 11% in September, down from 18% a year and a half earlier, according to Hsu's research. This represents what she called "a huge drop." The pessimism persists even as the stock market performs well and wages have risen nominally, suggesting that household finances remain strained despite these headline improvements. Since the start of the Iran conflict, Hsu said, consumer sentiment has declined across all walks of life.
The cost pressures consumers face are substantial. The Bureau of Labor Statistics reported that grocery prices rose by more than four percent over the past two years. Gas prices have climbed 35% according to AAA, while 30-year fixed mortgage rates are projected to remain above seven percent through next year, according to Freddie Mac. President Trump had promised in 2024 that defeating inflation would "rapidly drive prices down, lower interest rates, and put more money into the pockets of American consumers" and bring down grocery bills, but these commitments have not materialised.
The housing market reflects the strain on buyers. Real estate agent Michael Perna said that mortgage rate increases from around 6.5% to 7.5% mean homebuyers can afford approximately $50,000 less than they could previously. In one Northville, Michigan neighbourhood, a house priced slightly above what current buyers can afford has sat on the market for more than a month rather than selling within a week as would normally be expected. Perna said even those with stable incomes must settle for less property, creating widespread frustration.
At the Franklin Cider Mill in suburban Detroit, visitors expressed their concerns directly. Jeffrey Robinson, a high school principal, said the situation is unsustainable and that "the average public is paying a price." Another visitor criticised tariffs for raising prices, while someone else said the economy "is not what he expected" under the current presidency. For savers and borrowers in the United States, these sustained high mortgage rates and rising living costs mean housing remains less affordable and real purchasing power continues to erode despite nominal wage gains.
Consumer sentiment initially rose when Trump was re-elected two years ago, but Hsu's data shows confidence has since declined significantly. The gap between wage growth and inflation appears to be the primary driver of economic dissatisfaction among American households across the political spectrum.