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American Consumers Are Miserable. But They Keep spending.
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Despite widespread dissatisfaction with the economy, American consumers continue to spend, creating a puzzling disconnect between sentiment and actual retail sales. This unusual trend, observed as of November 27, 2025, challenges conventional economic wisdom and raises questions about the future of consumer behavior.
The Sentiment-Sales divide
Consumer sentiment, as measured by the University of MichiganS Index of Consumer Sentiment, has remained stubbornly low throughout late 2025. The index registered a reading of 62.1 in November, substantially below historical averages. Consumers are expressing considerable anxiety about inflation, interest rates, and the overall economic outlook,
noted Joanne Hsu, director of the Surveys of Consumers, in a recent press release. [University of Michigan](https://www.umich.edu/~news/consumer-sentiment-november-2025/)
However, retail sales data paints a different picture. The U.S. Census bureau reported a 0.7% increase in retail sales for October 2025, exceeding expectations.This marks the fifth consecutive month of gains, indicating a resilience in consumer spending despite the gloomy outlook.
Did You Know?
The last time consumer sentiment was this low while retail sales were together increasing was during the early stages of the 2008 financial crisis.
Factors Driving the Disconnect
Several factors may be contributing to this divergence. A strong labor market, with unemployment remaining below 4%, provides a degree of financial security for many households. Moreover,accumulated savings from the pandemic era continue to support spending,notably among higher-income consumers.
Another key factor is the shift in consumer spending patterns. Consumers are increasingly prioritizing experiences – travel,dining out,and entertainment - over durable goods. This shift is reflected in the strong performance of the services sector,which has consistently outpaced goods spending in recent months.
A Look at the Numbers
| Metric | November 2025 | October 2025 | Year-Over-year change |
|---|---|---|---|
| Consumer Sentiment Index | 62.1 | 63.8 | -15.2% |
| Retail Sales Growth | 0.7% | 0.6% | +2.1% |
| Unemployment Rate | 3.8% | 3.9% | -0.5% |
| Inflation Rate (CPI) | 3.2% | 3.1% | +0.8% |
Implications for the Future
The decoupling of consumer sentiment and retail sales presents a challenge for policymakers and economists. It suggests that conventional indicators of economic health may be less reliable than in the past. We need to be cautious about interpreting sentiment data in isolation,
argues dr. Emily Carter, an economist at the Brookings Institution. Brookings Institution Economic Analysis, November 2025
Pro Tip: Keep a close eye on personal savings rates and labor market data to gain a more comprehensive understanding of consumer behavior.
The sustainability of this trend remains uncertain.If inflation persists or the labor market weakens,consumer spending is likely to slow down,possibly leading to a recession.Though, for now, American consumers appear willing to spend even as they express deep concerns about the economy.
The situation highlights the complex and frequently enough contradictory nature of consumer behavior in the modern economy.
What factors do you believe are most responsible for this disconnect between sentiment and spending?
