The University of Michigan’s preliminary September sentiment reading fell 7.5% from August to 47.8, the second-lowest on record, even as unemployment sits around 4.1%. One camp says people are correctly reading their own grocery and gas receipts; the other says a jobs market this intact doesn’t justify Great-Recession-level gloom. Is the vibe ahead of the data, or is the data lying?
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Add your commentThe data isn't lying and people aren't overreacting. My grocery bill for the same cart I've been buying for 15 years is up nearly 40% over three years. My landlord raised rent 22% last year. My employer gave me a 3% raise and called it "generous." The unemployment number tells you whether people have jobs. It does not tell you whether those jobs are enough. Those are completely different questions and I'm exhausted watching economists conflate them.
Hot take: consumer confidence surveys measure anxiety, not economic conditions. Americans have been anxious about everything for a decade — politics, climate, COVID, AI taking jobs. At some point you have to ask whether a sentiment index built for a less neurotic era still means what it used to mean.
Here's what I can't get over: the people telling us not to overreact are largely people for whom the last few years were fine or even good. Asset owners, homeowners, dual high-income earners. Yes, your economy is fine. The economy is not one thing. It's 330 million different situations and a lot of those situations are genuinely hard right now.
employed ≠ doing fine. i have a job. i have two jobs actually. i still had to borrow money from my mom to fix my car last month. the vibe IS the data.
My parents bought their house in 1987 for $74,000. It's worth $390,000 today. They talk about how tough it is to save and get ahead like it's some universal experience. I love them but they have no idea what it's like to be 28 in this economy trying to buy literally anything. No idea.
I'm 67, retired on a fixed income, and I will tell you right now that "low unemployment" means absolutely nothing to me when my Medicare supplement premium went up $58 a month this year and my electric bill has doubled since 2021. The economy works fine if you're young and earning. It punishes you if you're not.
Speaking as someone who works in financial planning: the gap between sentiment and traditional macro indicators IS real and IS notable, but it's not mysterious. The transmission mechanism from a hot job market to household financial comfort has been broken by the combination of high debt loads, elevated rates, and compounding inflation. People feel the squeeze even with a paycheck. This is econ 101 if you care to look.
I've run a small diner for 22 years. Food costs are up. Labor costs are up. My regulars are ordering water instead of sodas and splitting plates. That's not a vibe. That's my Tuesday.
"Hard to interpret cleanly" is doing a lot of work for people who want to dismiss it. When the second-lowest reading in the survey's history shows up, the burden of proof is on those claiming people are wrong, not on the people saying they're struggling.
To the person saying this is media-driven: explain how you square that with the fact that credit card delinquencies are at their highest point since 2012. People aren't just feeling bad, they're actually falling behind on payments. That's not a vibe. That's a ledger.
I changed my mind on this over the last six months. I used to be in the "people are overreacting" camp because I thought the jobs numbers told the full story. Then I actually sat down and did a line-item comparison of what I spent in 2021 versus now on the same lifestyle. I was wrong. The receipts don't lie even when the headlines do.
My daughter graduated college in May. Has a degree in data analytics, good GPA, did two internships. Has applied to 200 positions. Has had 11 first-round interviews. Zero offers. The unemployment rate does not capture her. She is not counted. She is not okay. And neither am I watching it happen.
The confidently wrong take that I keep seeing in threads like this is that low unemployment CAUSES high consumer confidence automatically, like one produces the other on a short delay. That's not how it works and it's never been how it works. Confidence is a function of forward expectations — what people think is coming — not just current conditions. If people with jobs are worried about keeping those jobs, or about affording the next bill, they will report low confidence. That's not irrationality. That's exactly how the survey is supposed to work.
Can someone explain what the Fed is supposed to do here? Rates are still elevated, housing is frozen, small businesses can't get affordable credit, and people's savings cushions from the stimulus years are depleted. I feel like we're in between chapters of a bad story and nobody wants to admit it.
That's actually a fair methodological point but I'd push back slightly — the index has been around since 1946 and has survived plenty of anxious eras. The 1970s were not exactly a chill time. If anything the historical comparisons should make us take this reading MORE seriously, not explain it away.
Fed question: there's no clean answer because they can't cut fast enough to fix housing without risking re-igniting inflation, and they can't hold rates without continuing to crush affordability. They're stuck. The honest answer is that monetary policy got us part of the way out and can't finish the job. Fiscal policy would need to do the rest and that's a political nonstarter right now.
The 28-year-old above nails something I've been trying to articulate: intergenerational wealth inequality means the same "economy" looks completely different depending on when you were born and whether your family had assets going in. Confidence surveys don't stratify by age cohort but I'd bet anything the under-35 numbers are absolutely catastrophic.
I hear you on the above and I believe it, but the University of Michigan survey also captures people who are personally doing okay but are anxious about politics, about their kids, about the news cycle. The question is whether 47.8 reflects genuine financial pain or a broader cultural pessimism. Probably both, which makes the number hard to interpret cleanly.
The diner owner and the two-job commenter and the parent with the unemployed college grad are telling you everything you need to know about where the real economy is versus where the headline numbers say it is. At some point you have to decide whose account you trust.
Honestly I think a lot of this is media-driven. People watch the news, hear the word recession 40 times a day, and update their feelings accordingly. The actual underlying numbers — employment, consumer spending, even wage growth — don't match the despair level. I'm not saying things are perfect, but 47.8 on sentiment when unemployment is 4.1% is a historical anomaly that deserves more scrutiny than "trust the vibes."
Retiree above makes a really good point that nobody in this conversation is addressing: inflation hits differently depending on what you actually spend money on. If you're 35 and your biggest expense is a fixed-rate mortgage you locked in at 3%, sure, you're cushioned. If you're renting or retired, you have almost no protection from the last three years. Sentiment surveys average across all those experiences and the average is going to look ugly.
I buy the "vibes are ahead of data" argument for some percentage of respondents, I really do. Social media amplifies bad news, doom-scrolling is a documented phenomenon, and political polarization means the party not in power always rates economic conditions worse. But "some percentage" is not a full explanation for a 47.8 reading. You still have to account for the people who are just straight up having a hard time financially.
I work in grocery retail management and I promise you the shrinkflation is real and deliberate and the internal justifications we get from corporate are genuinely insulting. A "value" size that's now smaller than the old regular size. Every week something changes. Customers notice. Of course they notice.
okay but is anyone going to actually address what the Fed SHOULD do now because that question is just sitting there unanswered
genuinely learned something from this thread which doesn't happen often, so. credit where it's due.
the 1970s comparison is doing a lot of heavy lifting here given that we had double digit inflation and gas lines. come on.
if you disagree with the 217-like comment at the top of this thread, explain how a 3% raise against 40% cumulative grocery inflation is workers "doing fine." I'll wait.
they do actually break it down and yes, younger cohorts are reporting significantly worse sentiment. it's in the supplementary tables if anyone wants to check.
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