Consumer Sentiment Is Crashing Everywhere | Joanne Hsu, UMich

People are super worried about the future

For a while now, the "soft" data (like confidence surveys) have indicated worry that times are tough.

But the "hard" data (like the unemployment rate, corporate profits, retail spending, etc) have shown that the economy is proving quite resilient.

So why the discrepancy?

And which data set should we be giving more weight to?

For perspective, we're fortunate to welcome back to the program Joanne Hsu, Director of the Surveys of Consumers at the University of Michigan.

If you've ever heard of the Univ of Michigan's highly influential Indices of Consumer Sentiment, Consumer Expectations, or Current Economic Conditions -- Joanne's in charge of those.

She reports that 2025 has seen a fast erosion of confidence across almost every dimension. People are super worried right now.

For the details, click here or on the video below:

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Adam’s Notes: Joanne Hsu (recorded 6.3.25)

EXECUTIVE SUMMARY:

• Consumer Sentiment Decline: University of Michigan surveys show a four-month slide in consumer sentiment through May 2025, driven by volatile trade policy fears, stabilizing post-China tariff pause.

• Broad Economic Worries: Consumers across demographics and political affiliations express concerns over business conditions, personal finances, rising unemployment, slowing income growth, and stock market performance.

• Soft vs. Hard Data Disconnect: Soft data (sentiment) is forward-looking, signaling slowdown, while hard data (e.g., GDP, unemployment) lags, showing resilience but weakening (e.g., April 2025 retail sales).

• High-Income Consumer Anxiety: High-income consumers, key to spending, show sharp sentiment deterioration, front-loading purchases due to tariff fears, threatening future demand.