Six in 10 Americans don’t trust what the federal government tells them on major issues

Only 34% of U.S. adults trust federal certifications of election results a great deal or quite a bit, down from 40% in 2024, while roughly 60% report low trust in federal information on major policy areas including elections, foreign affairs and the environment. The AP-NORC/USA Facts poll found a widening partisan trust gap, with Democrats’ confidence deteriorating sharply following Trump’s return to office; Democratic trust in election certifications fell to 44% from 65% in 2024. The erosion in institutional confidence follows federal workforce reductions, agency restructuring and contested changes in health, climate and election policy, raising political-risk concerns ahead of the 2026 midterms.

Analysis

The investable transmission is not consumer confidence but a higher political-risk premium around official data releases, fiscal negotiations, and election certification. If market participants increasingly discount federal statistics or expect legal challenges to administrative outcomes, Treasury and equity index volatility can rise even without a change in underlying growth or inflation; the most exposed instruments are duration-sensitive assets (TLT, IEF), index volatility (VIX), and agencies dependent on federal grants or rulemaking.

Near term, this is insufficient for a directional equity trade: polling distrust does not itself alter earnings. Over the next 1-3 months, monitor whether skepticism translates into delayed or contested administrative actions, credibility disputes around labor/inflation data, or heightened shutdown/debt-ceiling rhetoric; those would favor a wider term premium and pressure long-duration growth multiples. The 6-18 month structural risk is that degraded data capacity increases forecast dispersion, raising hedging costs and reducing valuation support for rate-sensitive sectors such as utilities (XLU), REITs (XLRE), and unprofitable technology.

The contrarian point is that broad political distrust is already a recurring feature of U.S. markets and often creates headline volatility rather than lasting risk-asset impairment. A durable repricing requires a concrete institutional failure—material disruption to data publication, appropriations, certification, or enforcement—not merely low survey trust. The thesis is falsified if official releases continue on schedule, election disputes are resolved rapidly through established processes, and Treasury term premium/interest-rate implied volatility remain contained.

Key Decisions for Investors

• No standalone directional position from this survey; treat it as a risk-monitoring input rather than an earnings catalyst.
• Set alerts for delayed BLS/BEA releases, shutdown or appropriations deadlines, and material election-certification litigation. If any coincide with a rise in MOVE and a steepening of the Treasury curve, reduce net exposure to long-duration equities via XLU/XLRE underweights for a 1-3 month horizon.
• For existing large duration exposure, evaluate short-dated TLT or IEF downside hedges only if implied volatility remains below realized rate volatility; the missing input is current option skew and premium. Avoid buying generic VIX calls absent a specific procedural catalyst because political-event vol is typically expensive and mean-reverts quickly.
• Watch state and local government credit spreads, particularly election-administration and federally funded issuers, for evidence that the issue is becoming a funding-risk event rather than a sentiment story. A sustained municipal-spread widening versus Treasuries would justify reassessing exposure through MUB or state-specific muni books.