Oct 12, 2026 · 22 min · 10 segments
Americans feel almost exactly as gloomy today as they did in 1980 — when inflation was near 14% and unemployment was close to 8%. Today those numbers are a fraction of that, yet consumer sentiment hit…
Justin WolfersHost
Now, my colleagues at the University of Michigan, they measure this by asking people five questions.
How are your finances compared with a year ago? How will they be a year from now? What will business conditions be like next year? What about five years from now? And is now a good time to buy a big household item? You'll notice a lot of these items, they're about asking people to look ahead.
So consumer sentiment picks up not so much the economy people are living in today.
For most of the past half century, if you wanted to understand consumer sentiment, it was probably enough to understand what was going on with inflation and unemployment.
If your grocery bill's outrunning your paycheck or if you're worried about keeping your job, the future looks a whole lot shakier.
I asked, "Given the inflation rate and the unemployment rate in every month back to nineteen seventy-eight, where would you predict consumer sentiment should normally be at a time like this?" So for summer of twenty twenty-six, the benchmark says, given the state of our actual economic indicators, consumer sentiment should be at about eighty-two.
The standard economic numbers, like inflation and unemployment, simply can't make sense.
Standard economic statistics are leaving a huge part of what Americans are actually experiencing unexplained.
So where should we look next? Well, the same Michigan survey asks one more question.
It asks people whether they think the government is doing a good job, a fair job, or a poor job on economic policy, specifically on fighting inflation and unemployment.
[chuckles] I'm gonna call that answer America's verdict or confidence in our economic managers.
But I'm gonna give you some numbers today, so I just wanna do a little bit of subtraction so that we can all understand what those numbers mean.
I'm gonna take the share of people who say the government's doing a poor job in economic management, and I'm gonna subtract the share saying they're doing a good job.
In late twenty twenty-four, the verdict was fourteen percent more people thought that the government was doing a poor job than a good job.
Now, my colleagues at the University of Michigan, they measure this by asking people five questions.
How are your finances compared with a year ago? How will they be a year from now? What will business conditions be like next year? What about five years from now? And is now a good time to buy a big household item? You'll notice a lot of these items, they're about asking people to look ahead.
So consumer sentiment picks up not so much the economy people are living in today.
For most of the past half century, if you wanted to understand consumer sentiment, it was probably enough to understand what was going on with inflation and unemployment.
If your grocery bill's outrunning your paycheck or if you're worried about keeping your job, the future looks a whole lot shakier.
I asked, "Given the inflation rate and the unemployment rate in every month back to nineteen seventy-eight, where would you predict consumer sentiment should normally be at a time like this?" So for summer of twenty twenty-six, the benchmark says, given the state of our actual economic indicators, consumer sentiment should be at about eighty-two.
The standard economic numbers, like inflation and unemployment, simply can't make sense.
Standard economic statistics are leaving a huge part of what Americans are actually experiencing unexplained.
So where should we look next? Well, the same Michigan survey asks one more question.
It asks people whether they think the government is doing a good job, a fair job, or a poor job on economic policy, specifically on fighting inflation and unemployment.
[chuckles] I'm gonna call that answer America's verdict or confidence in our economic managers.
But I'm gonna give you some numbers today, so I just wanna do a little bit of subtraction so that we can all understand what those numbers mean.
I'm gonna take the share of people who say the government's doing a poor job in economic management, and I'm gonna subtract the share saying they're doing a good job.
In late twenty twenty-four, the verdict was fourteen percent more people thought that the government was doing a poor job than a good job.
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