US Consumer Sentiment Hits Historic Lows Amid Societal Happiness Decline

The University of Michigan's US consumer sentiment index hit historic lows this year. Published last week, the index plunged by 13% in September compared to the same period last year, dropping to 47.8 points, and down 7.5% from August. This marks the second-lowest reading since the university began publishing the index in 1952, with the all-time low recorded last May at 44.8 points.

However, Goldman Sachs believes that this depressed reading is linked not only to economic factors but also to overall levels of societal happiness, according to a report by CNBC. Bank economist Joseph Briggs wrote over the weekend that the low economic sentiment likely reflects a more fundamental and gloomy assessment of the world's state rather than economic conditions alone.

While Briggs noted that inflationary pressures also weigh on public confidence, lower general happiness can partially explain the ongoing disconnect between consumer sentiment and other economic performance metrics, such as GDP growth or stock market results, which present a rosier picture.

Briggs pointed to data from the University of Chicago's General Social Survey, showing that happiness levels have never fully recovered from the plunge experienced during the COVID-19 pandemic. The proportion of respondents reporting they are "very happy" dropped to 23% in 2024, compared to 31% in 2016, while those reporting feeling "not too happy" rose from 13% to 20% over the same period.