Goldman Sachs links weak consumer sentiment to broader pessimism

Goldman Sachs consumer sentiment analysis has pointed to broader pessimism, including lower reported happiness and trust in institutions, as a possible factor behind weak US household confidence. The University of Michigan’s preliminary September reading fell to 47.8 from 51.7 in August, a 7.5% monthly decline, while year-ahead inflation expectations rose to 4.6% from 4.0%.

Joseph Briggs, a Goldman Sachs economist, told clients that subdued economic sentiment may partly reflect a downbeat view of the wider state of the world rather than economic conditions alone, according to CNBC. He also said inflation pressures were weighing on confidence.

The distinction is material for interpreting the index. Briggs’s view is a hypothesis about why sentiment has remained weak relative to measures that CNBC described as more favourable, including gross domestic product growth and stock-market performance. The available evidence does not establish that lower happiness caused September’s decline, nor that it is more significant than consumers’ concerns over prices.

Why is consumer sentiment falling?

Michigan’s September release identified more immediate pressures. Survey director Joanne Hsu said expectations for personal finances and business conditions over the coming year had fallen sharply, with respondents anticipating greater strain on household budgets amid higher fuel prices and trade tensions.

The preliminary index stood 13.2% below its September 2025 level of 55.1. Its current-conditions component registered 50.9, while the expectations component was 45.8. Michigan said sentiment was also 16% below its February reading, before the start of the Iran conflict. Final September figures were scheduled for release on September 25.

Michigan’s surveys cover personal finances, business conditions and buying conditions. Its expectations index assesses views of a household’s own financial prospects and the near- and long-term economy. The university says that measure is included in leading-indicator composites used by the US Department of Commerce’s Bureau of Economic Analysis and the OECD, though that inclusion does not make it a definitive forecast.

The gap between household attitudes and economy-wide indicators illustrates the difference between individual decisions and aggregate measures such as output and inflation, as explained in microeconomics and macroeconomics.

What is Goldman Sachs’ happiness argument?

CNBC reported that Briggs drew on the University of Chicago’s General Social Survey. In the data cited by Briggs, the share of respondents saying they were “very happy” declined to 23% in 2024 from 31% in 2016, while the proportion saying they were “not too happy” increased to 20% from 13%.

Briggs found in his analysis that declining trust in public institutions accounted for a disproportionate share of the fall in net happiness in recent years, CNBC reported. He said the importance of such non-economic factors could reduce sentiment’s usefulness as a guide to economic developments if the relationship persists.

For now, the evidence records both strands: a measured deterioration in sentiment and inflation expectations, and Goldman’s interpretation that wider social attitudes may be part of the explanation.

This story draws on original reporting from CNBC.