It’s almost summertime, and with it comes the bloom of the season. Kids will soon be out of school, and families will be heading off for vacations at the beach, camping in the mountains, or attending major league baseball games.
Or maybe not. If you believe the latest University of Michigan survey of consumer sentiment, Americans are feeling pretty gloomy about their own personal economic situation. Many people might instead stay home this summer, declining to spend their hard-earned cash on high prices for travel, gas, restaurants, and hotels. For those businesses that depend on a summer surge in customers’ spending, this summer could be very disappointing.
The Michigan survey has been used for decades as a key measure of how consumers feel about their place in the economy. The May release found that the index had dropped to an all-time record low, meaning consumer sentiment today is lower than at the depths of the housing market collapse and the Great Recession in 2008 - 2010…and worse than during the stagflation years around 1980, when both inflation and unemployment were in the double digits. Those were some hard times in America, and a University of Michigan survey finds consumers believe things are even worse today.
But don’t put away your swimming trunks and baseball pennants just yet. Other consumer indicators have found a more mixed picture. The Gallup economic sentiment polling has found that Americans’ economic confidence is only the worst since…2022, during the COVID pandemic. Americans are clearly pessimistic about both current economic conditions and the overall economy’s direction, but not quite at levels that match the Michigan survey’s gloom.
Another consumer measurement, called the Conference Board Consumer Confidence Index, dipped only slightly in May to 93.1, which is far from a historic low. It actually contained a silver lining as it found somewhat optimistic consumer expectations for six months from now. The Conference Board index tends to reflect job‑market strength or weakness more than gas or housing prices, and while unemployment has inched up to 4.3% from an extremely low 3.4% several years ago, that’s still low by historical standards.
The same with economic growth. The economy slowed in Trump’s first year to 2.1%, compared with 2.9% in President Joe Biden’s last two years, and in the first three months of this year, slowed further to 1.6%. But forecasters project full-year 2026 growth around 2.0%, which historically isn’t that bad.
The stock market has continued to reach near-record highs in recent weeks, with the S&P 500 up over 10% for the year. Unfortunately, most Americans don’t actually benefit, since the top 10% of affluent Americans own 93% of all stocks.
So while most Americans believe the economy is getting worse, the magnitude of that pessimism varies across different surveys. And objectively, just looking at the numbers, several indicators, such as employment and growth, are in the positive range.
Why so gloomy, American people?
So is America’s gloom justified? Will the mighty American consumer fight through this economic fog and have an exuberant summer? So many consumer attitudes are driven by what people expect in the months ahead. Expectations are like waterskiing for the first time -- hanging on for dear life to the rope from the back of the boat, your expectations of what will happen next are overwhelmed by that most perplexing of emotions: uncertainty.
Fear and anxiety over uncertainty are the best explanations for why Americans feel so gloomy, despite some decently stable economic indicators. When you have price inflation for a short time period, it’s not good, but it’s bearable. However, economists talk about what happens if uncertainty becomes “entrenched” in the economy, the term that the Federal Reserve uses. If expectations of higher inflation get hardwired, it’s a much more difficult situation because inflation feeds on that uncertainty. Prices will rise because everyone expects them to, and those expectations will be confirmed, unleashing an inflationary cycle.
We may be dangerously close to that tipping point. The Conference Board recently surveyed CEOs and found that 40% expected economic conditions to worsen over the next six months, which rose significantly from 13% in the first three months of 2026. Only 24% of CEOs expect economic conditions to improve, down from 43%.
Major retailers like Walmart are reporting that consumers are forgoing the purchase of big, expensive items. And the U.S. Bureau of Economic Analysis recently reported that the U.S. personal savings rate plummeted to just 2.6%, marking the lowest savings rate recorded since June 2022 as rising costs outpace wage growth.
In short, Americans are burning through their savings and their financial cushions. Under that pressure, the housing market, an important driver of economic growth, is slowing as mortgage rates climb again to almost 6.6%.
The historically low consumer sentiment seems to be driven by heightened anxiety about the future around prices, affordability, and inflation, and by how these are being impacted by the war in Iran, oil prices, tariff uncertainty, and more. All of this is starting to appear as a decline in consumer sentiment and widespread alarm, even as some economic indicators, such as growth and employment, remain at functional levels.
Denial is not a river in Egypt…
The Trump administration appears to be in denial about the paralyzing impact of this broad-based economic uncertainty. The White House’s director of the National Economic Council, Kevin Hassett, recently went on Fox Business News and boasted about how great the economy is doing. When asked why Americans aren’t feeling it, Hassett called the widely respected University of Michigan survey “just a worthless piece of data. It’s actually being driven by Democrats who have Trump derangement syndrome,” he said.
But the Michigan survey tracks respondents by party, and it’s not just Democrats who hold negative consumer sentiment. Independents’ views of the economy are similar to those of Democrats. And a separate survey by YouGov subdivided Republicans into those who do and those who don’t support MAGA — a shocking 65 percent of non-MAGA Republicans say that the economy is getting worse, while only 11 percent say that it is getting better. So basically, any American who is not a deep red Trump supporter believes that the economy is getting worse.
Looking into the crystal ball…
So the economy – and consumers – are facing a number of looming questions. What’s going to happen to the price of oil and gas at the pump, now nearly 60% higher than it was at the start of the year? What happens if gas prices stay at current levels – or go higher -- for another six months? Alternatively, what if President Trump and Iranian rulers figure out some kind of peace settlement, and gas prices fall back toward pre‑war levels? How long will grocery prices keep creeping up, as well as home energy prices and restaurant prices?
If those trends start to reverse due to White House policy, a peace deal with Iran, or other factors, the level of uncertainty and negative expectations may decline and return to the historical baseline. But if expectations decline and uncertainty increases, it could be a topsy-turvy summer as these economic forces play out.
Steven Hill was policy director for the Center for Humane Technology, co-founder of FairVote, and political reform director at New America. See more of his writing at his Substack newsletter DemocracySOS.
