Consumer pessimism at current levels last showed up during recessions like 2008 and the early 1980s. The gap between sentiment and economic data also looks like a typical pre-recession signal.

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American consumers have NEVER been this pessimistic about the economy:

The University of Michigan Consumer Sentiment Index fell to 49.8 in April, the lowest reading EVER in over 70 years of polling, with declines occurring across all income levels, ages, and political affiliations.

This comes as gasoline prices posted the largest monthly jump in pump prices in both dollar and percentage terms on record, while high-profile layoffs and tariff uncertainty continue to weigh on household confidence.

Furthermore, 64% of consumers now expect unemployment to rise over the next 12 months, up from 32% in June 2022, a level that has historically never been seen outside of an actual recession.

Concerningly, if enough consumers hold back on spending, those individual choices can ripple through the economy and turn a sentiment recession into a real one.

The data says no recession. Most Americans say the opposite.

So many are confused by the huge gap between soft data (survey results) like the U of Michigan data below and objective economic metrics (GDP, Labor, etc). My advice, don’t fade the sentiment data. It represents real economic pain currently being experienced by many Americans.

There are two primary reasons for the historic discrepancy in the different data. Record fiscal stimulus continues to prop up headline GDP and employment numbers, while the proliferation of gig economy jobs is helping to keep official unemployment low even as real household pain persists.

The US federal deficit is currently running at around 6% of GDP, well above the long term historical average of 3.8%. Federal spending is 23% of GDP (which doesn’t include spending by state and local governments).

Gig work has exploded. Approximately 76 million Americans (about 36% of the workforce) participated in freelance/gig work in 2025, with projections nearing 50% by 2027.

Aggregate GDP and jobs numbers seemingly look respectable, but the real life experience for a large chunk of American households is much rougher. Consumer sentiment surveys are capturing that gap better than the smoothed official metrics right now.