Monthly · University of Michigan via FRED
Consumer sentiment captures how optimistic or pessimistic ordinary Americans feel about their financial situation and the economy - and consumer spending drives about 70% of U.S. GDP, so how people feel matters enormously. The University of Michigan surveys about 500 households monthly on current conditions and expectations for the year ahead. Published twice monthly - preliminary mid-month and final at month-end.
Above 80 indicates confident consumers likely to spend freely. Between 65-80 is cautious but stable. Below 65 signals stress that historically precedes slower consumer spending by 3-6 months. Below 60 is recession-level pessimism. The expectations component is more forward-looking than the current conditions component. A large gap between the two - high current conditions but low expectations - signals consumers feel OK now but fear what is coming, often a leading warning. The index troughed at 50 in mid-2022 during peak inflation.
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Analysis updated: Jun 18, 2026
At 49.8, sentiment may be bottoming near levels historically associated with capitulation rather than sustained deterioration, suggesting a potential mean-reversion rally in consumer confidence over coming quarters. If the underlying drivers — tariff uncertainty and inflation anxiety — show any resolution, pent-up demand could translate into a sharper-than-expected recovery in consumer spending. Past episodes near these lows, such as mid-2022, were followed by gradual stabilization once the primary inflation shock subsided.
A reading of 49.8 places sentiment near levels last seen during the 2008–2009 financial crisis and the acute phase of the 2022 inflation surge, signaling deeply entrenched household pessimism that typically precedes meaningful pullbacks in discretionary spending. Given that consumer spending accounts for roughly 70% of U.S. GDP, a sustained decline at these levels raises the probability of a consumption-led contraction within the next two to three quarters. The falling trend amplifies the concern, as momentum in sentiment declines tends to persist, compressing both retail sales and business investment simultaneously.
This reading sits well below the long-run average of approximately 85–90 and is consistent with a macro environment characterized by elevated policy uncertainty, residual inflation pressures, and tightening financial conditions weighing on household balance sheets. As a leading indicator with a 3–6 month forward signal, the April 2026 reading suggests headwinds to economic activity extending into late 2026. Key data points to monitor include the Conference Board Consumer Confidence Index for corroboration, monthly retail sales for real spending confirmation, and any shifts in 1-year inflation expectations embedded in the Michigan survey, which the Fed watches closely.
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