Consumer Sentiment Is Near a 75-Year Low

Third Lowest in 75 Years

The University of Michigan Consumer Sentiment Index came in at 53.3 this month.

That is the third-lowest reading in 75 years of data. The only times it was lower: June 2022, when CPI was running at 9.1%, and the double-dip recession of 1980.

The labor market doesn't explain it. Unemployment is 4.3%. The economy added 178,000 jobs in March. By every backward-looking measure, the job market is intact.

The easy explanation is the news cycle: tariffs, Middle East tensions, a market that's been choppy. But that explanation doesn't hold up with how long sentiment has been poor.

The chart below shows sentiment since COVID.

Sentiment was already declining through 2024. The S&P 500 returned 23% that year. Unemployment sat near historic lows. The official picture was about as good as it gets, and people kept feeling worse.

What changed in 2022 wasn't just inflation. It was the baseline. Prices moved up 25% over five years and didn't come back down. The market recovered. Portfolios recovered. The grocery bill didn't.

The recent headlines: tariffs, oil prices, geopolitical uncertainty are real. But they're landing on top of something that was already there.

June 2022 had 9% inflation to account for the feeling. Today the hard data looks better. The feeling is nearly the same anyway.

Until next week,

Jacob

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