Americans feel worse than ever, a consumer survey shows. The White House says that's bunk. Who's right?

By Jeffry Bartash

Surveys on consumer sentiment and consumer confidence tell different stories about the U.S. economy

Americans are unhappy about high gas prices and resurgent inflation.

Are Americans really feeling worse than ever about their financial well-being? A long-running survey of consumers suggests the answer is yes - drawing a sharp rebuke from President Trump's right-hand man on the economy.

The University of Michigan's survey of consumer sentiment sank to 44.8 in May, marking the lowest level in records dating back to 1978, when the university began publishing the index on a monthly basis.

Sentiment was worse in May than any point during the 2020-21 coronavirus pandemic. It was also worse than at any point during the financial crisis of 2008-09. And it was even worse than at any point during the tumultuous period of 1980-82, when the U.S. suffered two recessions, 11% inflation and 18% mortgage rates.

The report, published last Friday, drew sharp criticism over the weekend from Kevin Hassett, director of the president's National Economic Council. He ridiculed the sentiment survey as being "political."

"Right now, the consumer-sentiment index from the [University of] Michigan survey is just a worthless piece of data, " Hassett said in an interview on Fox Business. "It's actually being driven by Democrats who have Trump derangement syndrome."

Hassett was far less critical just one year ago. In May 2025, he touted a big increase in the sentiment survey to suggest the public approved of the White House's tax cuts and broader economic agenda.

In any case, he's now humming a different tune.

Confidence in confidence

Hassett instead has been emphasizing a separate survey - the Conference Board's consumer-confidence index - that he asserts more accurately reflects Americans' views on the economy.

The consumer-confidence survey had reached a four-month high of 93.8 in April, before slipping to 93.1 in May.

The consumer-confidence index is also far above an all-time low. It was lower during the pandemic, and it plunged to an all-time low of 25.3 in the waning stages of the financial crisis some 17 years ago.

"[The] consumer-confidence survey is actually still a good economic indicator," Hassett said in the Fox interview.

Does Hassett have a point?

There's no doubt the sentiment index shows a partisan split that's gotten worse over time, but it works both ways. Democrats have been extremely negative under Trump, but Republicans were also sour on the economy when Joe Biden was president.

The survey showed Democratic sentiment falling to a record low of 32.5 in April, down from 51.3 after Trump began his second term. By contrast, Democratic sentiment had been as high as 101.7 in Biden's last year in office.

Hassett said record-low Democratic sentiment now was hard to believe, given that it was extremely high under Biden even during the worst bout of U.S. inflation in 40 years.

Yet Republicans also felt very negative when a Democrat was in the White House; GOP sentiment hit an all-time low of 33 in mid-2022. Conservatives only became very optimistic again after Trump won a second term.

For more, see: Consumer sentiment sinks to an all-time low. Is this about Democrats' distaste for Trump?

Perhaps trying to head off White House criticism, the University of Michigan on Friday issued an unusual press release contending its survey closely tracked the views of political independents. It also noted that sentiment among Republicans had fallen to the lowest level of Trump's second term.

"Are the relatively dour readings seen in recent months being disproportionately driven by Democrats? A closer inspection of data on multiple dimensions of the economy reveals a resounding no," said Joanne Hsu, director of the University of Michigan survey.

The consumer-confidence index preferred by Hassett, as it turns out, also shows a similarly deep partisan split: Republicans are optimistic, Democrats are pessimistic and self-described independents say they feel just as bad as Democrats.

Apples and oranges?

What do Wall Street economists think? For one thing, they point out that the surveys measure different things.

The sentiment survey asks people about their finances - and inflation has a huge impact on what people spend and buy. That's especially true for gasoline prices, which have soared since March due to the conflict with Iran.

"Few goods or services are subject to the daily scrutiny or attention as the price of gasoline. Consumers feel it every time they stop to fill their tanks," said Jim Moran, chief investment officer at Plante Moran Financial Advisors "It's hard to miss, and it carries more psychological weight than price increases for many other products."

The confidence survey, by contrast, puts more emphasis on the labor market. Right now, unemployment is low at 4.3%, layoffs are near a record low and hiring has picked up recently after a prolonged lull.

Still, economists say it's no surprise both the sentiment and confidence surveys show plenty of angst given that the U.S. is involved in a major military conflict, gas prices have surged and and inflation has reignited.

The confidence index preferred by Hassett, at 91.3 in May, is far below the 112.8 reading when Trump won the November 2024 election. It also sits about 50% below an 18-year high of 137.9 midway through Trump's first term in office.

Feelings vs. actions

Yet the biggest thing to remember, economists say, is that neither the sentiment nor confidence survey is a reliable tool to figure out how much Americans are going to spend. Consumer spending is the single biggest source of economic growth, and the most influential factor in keeping the U.S. out of a recession.

How much Americans spend, and what they buy, tells us more about the health of the economy than how people say they feel about it, analysts note. Watch what they do and not what they say, the Wall Street motto goes.

The good news is that spending has been very stable, and not just because of high inflation. Most people who want a job have one, wages are rising and the wealthy in particular have benefited from a raging bull market in stocks.

"Fortunately for the economy, sentiment isn't a reliable leading indicator of spending," said Oren Klatchin, an economist at Nationwide.

He and other economists expect higher inflation to act as a brake on consumer spending and force people to focus more on needs than wants, but "the pullback will be much less severe than the sentiment data suggest," Klatchin said.

Brian Therien, senior analyst at Edward Jones, agreed. "Consumer spending has remained solid despite generally weak sentiment, a trend that we expect to continue," he said.

-Jeffry Bartash

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

05-26-26 1448ET