US consumer sentiment drops to near record low as shutdown persists

The University of Michigan consumer sentiment index for November plunged to a near-record low 50.3, down from 53.6 in October and missing expectations, marking the lowest reading since at least 1978. This sharp decline is attributed to the federal government shutdown, reflecting widespread consumer concern. Concurrently, private sector data, utilized during a federal data blackout, indicated a significant slowdown in job creation with ADP reporting 42,000 new private jobs, alongside a 175% year-over-year surge in job cuts to 153,074, the highest October level since 2003, underscoring mounting economic pressures.

Analysis

The University of Michigan consumer sentiment index for November 2025 plunged to 50.3, a 6% decline from October's 53.6 and below the 53.0 consensus, marking the lowest reading since at least 1978. This sharp deterioration, attributed to the ongoing federal government shutdown, indicates widespread consumer worries across all demographics.

Amid a federal data blackout, alternative reports highlight a weakening labor market. ADP reported only 42,000 new private jobs in October, a significant slowdown from the prior three-month average of 188,000. Additionally, Challenger, Gray & Christmas noted a 175% year-over-year surge in October job cuts to 153,074, the highest for that month since 2003.

This confluence of severely depressed consumer sentiment and a deteriorating labor market suggests mounting economic headwinds. The prolonged government shutdown is exacerbating these concerns, potentially impacting future consumer spending and broader economic activity, echoing previous periods of stress like June 2022.

Key Decisions for Investors

• Monitor consumer spending indicators closely, as the sharp decline in sentiment and rising job cuts suggest potential headwinds for consumer-facing sectors.
• Evaluate portfolio exposure to discretionary consumer goods and services, considering the widespread negative sentiment and its potential impact on demand.
• Watch for resolution of the federal government shutdown and subsequent federal economic data releases, as these will be critical for reassessing the economic trajectory and investor sentiment.
• Consider defensive positioning or hedging strategies given the strongly negative sentiment, deteriorating labor market signals, and elevated political uncertainty.