Michigan Survey Chief: Consumer Mood Is Lower Than in 1970s, 2008 or Post-COVID

At the Franklin Cider Mill in suburban Detroit, where the hot donuts and cider slushies draw a crowd every fall, customers asked about their finances three weeks before Election Day mostly gave the same answer. "I would say most are struggling, if I'm being honest," one woman said. High school principal Jeffrey Robinson put it more bluntly: "It sucks. We have parents that carpool that are finding it hard to keep gas in the car."

Joanne Hsu has numbers to back that up. She runs the University of Michigan's consumer sentiment survey, the nation's longest-running, which dates to 1946. Since the start of the Iran conflict, she said, "We've been seeing quite a bit of decline in consumer sentiment across the board, across all walks of life." Sentiment is now lower than at almost any other time in modern history, Hsu said, including the stagflation of the mid-1970s, the 2008 financial crisis and the post-COVID price spikes under President Biden.

The mood cuts across party lines. "Democrats, Independents and Republicans, all three groups, feel worse about the economy in this administration than they did in the first Trump administration," Hsu said. People feel that way even though the stock market is doing well and wages are rising, because pay is not keeping up with inflation. The share of consumers who expect their wages to grow faster than inflation fell from 18% a year and a half ago to 11% in September. "That's a huge drop," Hsu said.

Sentiment initially rose after Mr. Trump's reelection two years ago. But in Michigan in 2024 he promised that one of his top priorities would be to "quickly defeat inflation and make America affordable again." According to the Bureau of Labor Statistics, grocery prices have risen by more than 4% in the past two years. AAA says gas prices are up 35%. Freddie Mac projects 30-year fixed mortgage rates will stay above 7% through next year.

Real estate agent Michael Perna said the housing market is feeling it. A house in Northville that would normally sell in a week has been listed for more than a month. Mortgage rates that were around 6.5% are now 7.5%, he said, and buyers can afford $50,000 less. "It would not surprise me if we saw a rate that starts with an 8 before we see a rate that starts with a 6," Perna said.

Voters at the mill were divided on whom to blame. One woman criticized the tariffs, saying "It raises all of our prices," but thinks they are needed over the long term to bring back manufacturing jobs. A man said the economy is not what he expected from Mr. Trump's second term: "He promised us, and I don't think he kept his promise." Robinson said he is not waiting on the $5,000 check Mr. Trump has floated. "I know that's not coming," he said, adding that he does not know how long the average person can sustain what they are going through now.