Consumer sentiment crashed in November. The University of Michigan's Index of Consumer Sentiment hit 50.3 - down 6.2% from October's 53.6 and about 30% below a year ago.
Economists expected 53.0. The actual reading came in well below that forecast.
Sentiment hasn't been this low since June 2022, when inflation hovered around its highest level in 40 years.
The government shutdown drove the decline. Director Joanne Hsu said worries about the Washington impasse topped consumer fears, even outweighing a boost from record-high stock prices.
"With the federal government shutdown dragging on for over a month, consumers are now expressing worries about potential negative consequences for the economy," Hsu said.
The decline was widespread - hitting consumers across age groups, income levels, and political affiliations.
Current conditions fell to 52.3, dropping nearly 11% from last month. Future expectations sank to 49.0, down 2.6%.
Year-over-year comparisons look even worse. Current conditions slumped 18.2% from last November. Future expectations crashed 36.3%.
Inflation expectations held relatively steady. The one-year outlook nudged higher to 4.7%. The five-year measure dropped 0.3 percentage points to 3.6%.
With government economic data suspended during the shutdown, surveys like Michigan's become more important. They're alternative measures of economic progress when official data isn't available.
The lack of government reports on jobs, inflation, and spending makes consumer sentiment readings more valuable for gauging economic health.
The survey found disparity by asset holdings. Among those with the largest stock holdings, sentiment actually improved 11%.
That split makes sense. Stock market investors are seeing their portfolios hit record highs. But Americans without significant stock holdings don't benefit from those gains while facing shutdown uncertainty.
Consumer sentiment near its worst level ever is a flashing warning sign. When Americans' confidence about the economy drops to levels last seen during 40-year high inflation, something is seriously wrong.
The government shutdown clearly spooked consumers. A month-long impasse with no resolution in sight creates uncertainty about everything from federal paychecks to economic data to government services.
Hsu noting the decline was "widespread throughout the population" means this isn't just one demographic group panicking. Young and old, rich and poor, Democrats and Republicans - everyone's confidence is cratering.
The 30% year-over-year decline is massive. Last November, consumers felt significantly better about the economy than they do now. That deterioration happened despite unemployment remaining relatively low and the stock market hitting records.
Current conditions falling 11% in a single month shows rapid sentiment collapse. Future expectations dropping means Americans don't see things getting better anytime soon.
The stock market disconnect is stark. Investors with large holdings saw sentiment improve 11% while everyone else grew more pessimistic. That wealth gap in confidence reflects who benefits from record stock prices versus who worries about shutdown impacts.
Inflation expectations staying relatively contained is one bright spot. Despite all the negativity, consumers aren't panicking about runaway price increases. The five-year outlook actually declined slightly to 3.6%.
But overall, these numbers are terrible. Sentiment at 50.3 leaves little room before hitting the all-time low. With the shutdown entering week five and no resolution apparent, next month's reading could be even worse.