Why Is Consumer Sentiment at Record Lows?
Consumer sentiment is at record lows because there is zero visibility on any real-world trends that would be positive for the bottom 90%. Vague promises of super-abundance are not visibility.
Why is consumer sentiment at record lows while the stock market is at record highs? The media / social media are ablaze with coverage and commentary on this K-shaped economy, for example: The Stock Market Has Never Been So Good When People Have Felt So Bad: Stocks are partying like it’s 1999. Americans haven’t been this gloomy in 70 years. (wsj.com)
While much commentary focuses on the rising cost of living (i.e. inflation) and the potential disruption of jobs by AI, these miss the larger dynamic of visibility, i.e. what is visible looking forward. If the horizon is clouded by uncertainty and unaffordability, then the core investments in the future--a family home and a family--are no longer in reach except for the lucky few inheriting wealth while they’re young. A high-paying job that isn’t secure is not a foundation, it’s a temporary raft in a tempestuous sea.
Why So Few Babies? We Might Have Overlooked the Biggest Reason of All.
What unites these disparate cultures, policy environments and demographics, researchers are now realizing, is young people’s inescapable and crushing sense that the future is too uncertain for the lifelong commitment of parenthood.
The future has never been assured, but it feels as though we are living in a time of spectacular uncertainty. The Gen X writer Astra Taylor calls ours “the age of insecurity”; the Gen Z writer Kyla Scanlon has described “the end of predictable progress.” Gen Z-ers’ uncertainty about the future can’t be captured by the usual metrics or entered neatly into a spreadsheet. But it may be the X factor in the global parenting free fall.
Raising children is an inherently forward-looking project, and in Professor Vignoli’s analysis, increasing exposure to a volatile global economy and accelerating technological change make it hard for young people to project a path forward with even a modest degree of confidence.
In previous lows in consumer sentiment, current economic conditions were unfavorable because the economy was in a recession. I’ve indicated the three major recessions of the past 50 years on the chart below: 1973-74 (energy crisis / inflation), 1980-82 (inflation, higher interest rates), and 2008-09 (housing bubble burst, subprime mortgage meltdown triggers Global Financial Crisis).
The most important difference between then (1973-2009) and now is that average households could still afford to buy a house and have a family and now those are out of reach for a significant percentage of median-income urban households. In previous recessions, consumers suffering the effects of recession had visibility on evidence that once the economy improved, they would still be able to afford to buy a house and raise a family. This visibility wasn’t a top-down narrative bolstered by gamed statistics; it was visible across the entire spectrum of the economy.
The truth few dare to recognize is there is no credible evidence that housing and having a family will return to being affordable for the majority in the foreseeable future. If these are what matters, then rising GDP (a favorite metric of those promoting the narrative that rising GDP means everything’s getting better for everyone) offers no visibility on what matters to households.
Also unsaid because it undermines the narratives of permanent Progress and the system benefits us all is the visible decline of the quality of everyday life. Life is more hectic, more precarious, less secure, and our health is declining in ways that go unrecognized because that undermines the narratives propping up the status quo.
It’s not just the cost of living is rising; the quality of life is deteriorating in ways that are not easily measurable. Healthcare claims being denied, busy-work being offloaded by Corporate America onto the household, the steady decline in quality of goods and services--in all these cases, what was once reliable and of good quality has been degraded. To contact customer service is now a nightmarish experience of being returned to the same menu of options, none of which address the problem you’re trying to resolve.
This Is Why You’re Drowning in Busywork We have been told that AI will take people’s jobs. What no one mentions is that many of those jobs are landing on us. The AI revolution involves a huge transfer of labor--not from worker to machine but from worker to consumer.
Consumers have visibility on this degradation of the quality of everyday life, and they see no plausible evidence it’s reversing. The trajectory of the future is more degradation, and there is no evidence AI will reverse this trajectory. Rather, in many ways it’s accelerating it.
There is a lively debate about whether AI will in aggregate create jobs or eliminate jobs, or generate churn that leaves the total number of jobs about the same. At this early stage, there is no visibility on how this will play out, but consumers have visibility on the potential for job losses, reductions of benefits, the collapse of job security and the possibility that most of the replacement jobs being created will be low pay and insecure.
Households have no visibility on the promise that AI will generate vast prosperity that they will share, but they have clear visibility on AI decimating stable employment. Pundits offer up the historical record that previous Industrial Revolutions laid waste to social and economic security but eventually created more general prosperity.
Households understand that this sounds nice while supporting the status quo inequality, but there is no guarantee in history; it’s not gravity, it’s contingent. This Industrial Revolution might just decimate social and economic structures and leave a dystopia in its wake that institutionalizes extreme inequality not just in wealth and outcomes but in opportunity and freedom of movement.
What’s visible is not warm and fuzzy, and insisting that consumers / households have it wrong because those set to reap extraordinary profits insist it wll all work out just fine is comically disconnected from reality. There is no visibility on all those promises of super-abundance that’s going to lift all boats, and no visibility on society surviving the onslaught of Big Tech AI.
The social order that underpins the economy has already been already discounted to near-zero by the technocratic value system and machinery of Big Tech’s optimization to increase profitability by any means available, and the resulting decay of the quality of life and the moral foundations of a functional society.
Why is consumer sentiment at record lows while the stock market is at new highs? Ask what’s visible. What’s visible is soaring corporate profits and stock indices only benefit the top 10% who own the lion’s share of stocks. What’s visible is the decline in security, affordability, the purchasing power of wages and the quality of life, and the absence of any evidence that this trajectory downward is about to reverse.
What’s visible is billionaires reaping outlandish gains from financializing technology promising that their gains will trickle down to the bottom 90% after the foundations of the bottom 90%’s security are gutted and reworked in some unforeseeable way that will magically make everyone rich.
This isn’t visibility; it’s FantasyLand. What’s visible is the decay and decline of security, employment, opportunity and visibility itself, and the emergence of a neofeudal society that is so corrupt that it no longer has the ability to recognize its own moral decay.
We inhabit a Tower of Babel that’s automating its own demise. We all have visibility on this, but to admit this is to admit the entire status quo is set on self-destruct while indulging in self-glorifying fantasies.
Consumer sentiment is at record lows because there is zero visibility on any real-world trends that would be positive for the bottom 90%. Vague promises of super-abundance are not visibility.
Here is the May 2026 snapshot of consumer sentiment:
This is a 10-year chart of consumer sentiment:
What do we have visibility on? How about the widening gulf between the wealthy and powerful and everyone else?
Charles Hugh Smith: One critical anomaly not illuminated enough is the accelerating collapse of public trust among the bottom 90% - that government still functions in their interests at all — rather than primarily in the interests of the top 10%, financialized capital, and politically connected asset holders. That distinction matters enormously.
Previous American crises — stagflation, the Savings & Loan collapse, even 2008 — still carried a residual belief that institutions were at least attempting to restore broad-based prosperity. Today, millions increasingly suspect the system is functioning exactly as designed: profits privatized upward, losses socialized downward, while official narratives and their Orwellian media insist the economy is “strong.”
This is why traditional economic metrics no longer restore confidence. GDP growth, low unemployment, soaring equity markets, and AI productivity forecasts mean little to households that experience daily life as increasingly unaffordable, extractive, administratively hostile, and precarious. The deeper crisis is not merely inflation or inequality. It is the erosion of institutional legitimacy itself. Once populations no longer believe their governing institutions understand, represent, or even care about their lived reality, consumer pessimism becomes rational rather than emotional.
That is no longer a cyclical downturn problem. It is a paradigm-level fracture.
visibility:
in my opinion, anyone who has done adequate reading can see that degrowth is here and will be irreversible and relentless.
the affordability of modern living will decline gradually and slowly year after year for many decades until almost all people are living in poverty in the 2nd half of this century.
we are in the early stage of degrowth.
it will be getting severe in the 2030s or 2040s depending on where a person lives.
this is all clearly visible.
the 2020s are the good olde days.