Goldman Sachs links record-low US consumer sentiment to societal unhappiness and eroding trust
The University of Michigan consumer sentiment index hit record lows in September 2026, falling 13% year-over-year. Goldman Sachs economist Joseph Briggs argues this decline stems from broader societal unhappiness and eroding trust in institutions, rather than just economic metrics. While GDP and stock markets remain strong, Briggs notes that happiness levels have not recovered since the pandemic, suggesting sentiment may no longer reliably predict economic performance.
Key points
- University of Michigan consumer sentiment index dropped 13% year-over-year in September 2026, reaching record lows.
- Goldman Sachs economist Joseph Briggs attributes the decline to broader societal pessimism and lower happiness, not just inflation.
- Data from the University of Chicago’s General Social Survey shows 'very happy' respondents fell from 31% in 2016 to 23% in 2024.
- Briggs links declining happiness to decreasing trust in public institutions, which he says drives a disproportionate amount of the happiness drop.
- The disconnect between strong economic indicators (GDP, stocks) and weak sentiment may render consumer sentiment a less useful predictor of future economic dynamics.
Background
In August 2026, Goldman Sachs warned that a tax-refund boost to US spending might fade, projecting slower real consumer spending growth in the second half despite strong GDP. This latest analysis expands on that concern by identifying non-economic factors, such as societal unhappiness, as a persistent drag on consumer confidence.
How outlets are covering it
CNBC and Pluang highlight Goldman Sachs’ view that societal unhappiness and eroding trust in institutions are primary drivers of the sentiment drop, distinct from traditional economic metrics. FlowingData emphasizes the broader disconnect between positive economic numbers (low unemployment, high spending) and negative lived experiences (wages not keeping up with inflation). Yahoo Finance’s content was largely inaccessible due to technical errors, offering no substantive perspective on the sentiment data.
Why it matters
If consumer sentiment is driven by non-economic factors like happiness and trust, it may fail to predict future economic downturns. This could mislead policymakers and investors who rely on sentiment indices to gauge consumer spending trends, potentially masking underlying economic resilience or fragility.
What to watch
Economists will monitor whether consumer sentiment continues to diverge from GDP and stock market performance. Future analyses may focus on how institutional trust and happiness metrics correlate with spending behavior, potentially leading to revised economic forecasting models that incorporate sociological data.
- Consumer sentiment is in the dumps despite a solid economy. Goldman Sachs blames 'lower happiness' CNBC
- When the economy seems good in numbers but feels bad in reality FlowingData
- Stocks Rise as Jobs Remain Steady, Yet Americans Feel the Stress Yahoo Finance
- Consumer Gloom Is No Longer Just About the Economy The Dark Side Of The Boom
- US consumer sentiment hits record lows, linked to declining happiness and trust in institutions Pluang
Want the full story? Read the original reporting
Read on CNBC