Americans feel more and more glum, data shows. Economists are over it - usatoday.com
Despite strong economic indicators, American consumer sentiment remains low, creating a disconnect that economists are struggling to explain. Experts are shifting focus toward objective data like spending and hiring rather than sentiment surveys.
Why it matters
The breakdown of consumer sentiment as a leading economic indicator challenges traditional forecasting models.
Hear this story Six years after the COVID-19 pandemic, Americans still feel gloomy and no once-a-month economic report seems to make them happy.
Since the pandemic, the economy and jobs market have recovered but consumer sentiment hasn't. Sentiment has ebbed and flowed in the last six years, but has never climbed back to pre-pandemic levels, University of Michigan Consumer Sentiment Index data shows. The Conference Board's Consumer Confidence Index also dropped in September.
The gap between how people feel and the ongoing strength of spending and the economy is a unique post-pandemic phenomenon economists can't quite explain. Historically, consumer sentiment has been a fairly reliable leading indicator of where the economy's headed, based on the idea that if the consumer feels confident and optimistic, they'll spend more. If not, they won't and the economy's headed for a soft patch. Consumer spending accounts for about 70% of the U.S. economy.
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