Michigan consumer sentiment turns pessimistic before midterms as costs strain households
Households feel the squeeze
At Franklin Cider Mill in suburban Detroit, visitors were asked about their finances three weeks before Election Day. High school principal Jeffrey Robinson said some parents who carpool are finding it difficult to keep gas in their cars.
Economist Hsu said consumer sentiment is lower than at nearly any other point in modern history, including the mid-1970s stagflation era, the 2008 financial crisis and the price increases after COVID. She said that mood persists despite a strong stock market and rising wages.
Inflation outpaces wage growth
Hsu pointed to the gap between wages and inflation as a key reason people do not feel they are getting ahead. The share of consumers who expected their wages to rise faster than inflation fell from 18% a year and a half ago to 11% in September.
Consumer sentiment initially rose after President Trump was reelected two years ago, Hsu said. During his 2024 campaign, Trump promised in Michigan to lower prices, interest rates and grocery bills, but the article says he has not delivered on that campaign pledge.
Mortgage rates limit buyers
In Northville, a home that would normally have sold in about a week had been on the market for more than a month. Perna said it was priced above what buyers could afford.
Perna said mortgage rates had risen from about 6.5% to 7.5%, reducing buyers’ purchasing power by $50,000. Even buyers with steady incomes, he said, must settle for less when rates rise, contributing to negative feelings about the economy.
Voters weigh economic concerns
At the cider mill, reactions to the economy and Trump’s tariffs varied. One woman said the tariffs raise prices, but argued they are needed over the long term to bring more manufacturing jobs to the United States.
Robinson said ordinary people are paying a price and expressed doubt that the economy and average households could sustain current pressures indefinitely. The article raises the question of whether consumer frustration will translate into anger among voters.
Key points
- Hsu said consumer sentiment is near historic lows despite rising wages and a strong stock market.
- Only 11% of consumers expected wages to outpace inflation in September, down from 18%.
- Perna said mortgage rates rose from about 6.5% to 7.5%, cutting buyers’ budgets by $50,000.
- Michigan residents expressed mixed views on tariffs and the economy ahead of Election Day.