People say they feel broke and miserable, then swipe the card anyway. That is not confidence, that is muscle memory mixed with denial. Low layoffs and steady paychecks keep the spending alive even while people feel uneasy and stretched. This usually means the slowdown shows up late and hits harder, after everyone already told you they were worried. Sentiment is not lying, it is just early.
Consumers say they are in a sour mood, but their spending habits say something else
Consumer sentiment sits near record low at the end of 2025, but the news isn’t all bad
The numbers: American consumers were in a foul mood as 2025 drew to a close, and they are skeptical the new year will much better, but the news isn’t all bad. They are still spending plenty of money to keep the economic ball rolling.
A long-running survey of consumer sentiment registered a paltry 52.9 in December, the University of Michigan said Friday, leaving it near a record low.
Just how bad is that? In good times, the index usually hovers between 80 and 90, and it sometimes tops 100.
In the past, such negative sentiment was closely associated with a poor economy, but the connection between sentiment and the actual performance of the economy has loosened since the pandemic.
How come? Analysts point to a low unemployment rate and rising incomes to explain why Americans keep spending at levels consistent with a stable economy.
For all their angst, consumers feel pretty secure in their jobs. While businesses are no longer adding a lot more workers, they are mostly avoiding layoffs, too. The level of layoffs is also near a record low.