Consumer sentiment is closing out the year about as low as it’s ever been. Not quite at the record low it hit in June of 2022, but close. This year has been an emotional roller coaster for consumers.

“And that roller coaster shows no signs of stopping,” said Neale Mahoney, an economist at Stanford University

He said people actually started off the year feeling relatively good about the economy. 

“Trump had campaigned on lowering prices, and consumers were optimistic that he would address the cost-of-living crisis,” Mahoney said.

But, that optimism started to fade pretty quickly. It hit a low in April, around when President Donald Trump announced sweeping global tariffs. Then, coming into summer, “Trump backed down, consumers started to feel better. But, heading into the fall and winter, consumers have become more dour again,” Mahoney said.

Looking back, Erin McLaughlin, senior economist at The Conference Board, said if she had to sum up 2025, “it's sort of the year of the tariff and how that has impacted consumers.”

But Joanne Hsu, director of the University of Michigan’s Surveys of Consumers, said for all the ups and downs, the sentiment roller coaster has been heading in a clear direction.

“Consumers definitely have been telling us that the outlook for the economy deteriorated over the course of 2025,” she said.

The reason economists care about how consumers are feeling is that it generally drives how much they spend. And consumer spending is one of the main drivers of the U.S. economy.

Today, Hsu said people are feeling almost as bad about the economy as they were when inflation was at its peak in the summer of 2022.

“But we're in a very different situation right now. Back in 2022, people were, of course, very, very unhappy about inflation, but labor markets were really strong,” she said.

And because most people had jobs — and many were getting raises — they just kept on spending, even though they felt bad about the economy. For a while it seemed like the long-time link between sentiment and spending had broken.  

“But one of the big things that's different about this year is that consumers are quite worried about labor markets,” Hsu said.

And Josh Bivens at the Economic Policy Institute said there seems to be more of a connection again between how people are feeling and behaving this year.

“Sentiment was pretty bad, and you saw a noticeable deceleration in actual spending. So I would say, historically, they're pretty linked. They became delinked for a while. 2025, I think they started to come back together,” he said.

And that’s probably largely because the labor market and wage growth are slowing.