Americans have never been this pessimistic about their finances:
A record 41% of US consumers expect their financial situation to be worse over the next 12 months.
This figure has more than tripled since Q2 2024.
By comparison, during the 2008 Financial Crisis, this metric… pic.twitter.com/tDGQRNFtLb
— The Kobeissi Letter (@KobeissiLetter) October 30, 2026
Americans have never been more pessimistic about their personal financial future. According to figures highlighted by The Kobeissi Letter, a record 41% of US consumers now expect their financial situation to deteriorate over the next 12 months. That figure has more than tripled since the second quarter of 2024. During the 2008 Financial Crisis, the same measure peaked at only 23%. Even during the inflationary crises of the 1970s and 1980s, when inflation exceeded 10%, Americans were not this pessimistic about their financial prospects. Another 31% now expect to be financially worse off five years from today, roughly double the proportion recorded during the 1980s. These are extraordinary figures, and they expose the growing disconnect between the economy presented by Washington and the economy experienced by the average American.
The University of Michigan’s October Consumer Sentiment Index fell to 48.0, compared with 53.6 one year earlier. Its Current Economic Conditions Index dropped to 46.7, a decline of more than 20% from October 2025. Inflation expectations for the coming year have risen to 4.7%, compared with 3.4% before the Iran conflict began in February. Consumers are not imagining the deterioration in their purchasing power. They are living through it every time they purchase groceries, pay their insurance premiums, renew a lease, or attempt to finance a home. Yet politicians continue pointing to economic statistics as though the public simply does not understand how prosperous it has become.
The politicians celebrate when inflation declines from 9% to 3%, but they conveniently neglect to mention that prices have not returned to their previous levels. The consumer is still paying the enormous increases accumulated since 2020, and another 3% simply adds to that inflated base. Americans have experienced roughly a 30% increase in the general price level since the pandemic, with certain necessities rising substantially more. A family that required $60,000 to maintain its standard of living before the pandemic may now need approximately $78,000 to purchase the same basket of goods and services. Unless wages have risen proportionately, that family has experienced a genuine decline in its standard of living regardless of what the government claims about economic growth.
There are now two distinctly different American economies. Those who accumulated assets before the pandemic, particularly real estate and equities, have generally benefited from the enormous increase in asset prices. Those dependent upon wages have been forced to absorb rising living costs without receiving comparable increases in income. A homeowner with a mortgage locked in near 3% is living in an entirely different financial environment from a young family attempting to purchase its first home at today’s prices and financing costs. The same applies to younger Americans whose parents can provide a down payment or transfer family assets. Their opportunities are vastly different from those who must build everything from their wages alone.
This is also why the unemployment rate cannot explain the condition of the consumer. Someone may be employed full-time and still be falling behind financially. A second job does not necessarily represent prosperity when it is required merely to maintain the same standard of living. Households can continue spending while exhausting savings, increasing credit card balances, or postponing essential purchases. The appearance of consumer resilience can therefore conceal a serious deterioration in household balance sheets. People do not suddenly stop consuming because they are pessimistic. They continue purchasing necessities until they simply cannot afford them.
The savings figures are particularly revealing. The US personal savings rate fell to 4.2% in September, its lowest level since October 2022 and well below the five-year pre-pandemic average of 6.2%. Personal income increased 4.1% from a year earlier, while personal consumption expenditures rose 6.3%. Spending is expanding faster than income, and the difference must be financed through reduced saving, additional borrowing, or other resources. This cannot continue indefinitely. A household cannot perpetually spend more than it earns, yet the federal government has spent decades operating under precisely that assumption.
The government continues accumulating debt while demanding that taxpayers surrender more of their earnings to finance its expanding obligations. Washington can borrow, refinance, and create additional liabilities, but the average American does not possess that luxury. Credit cards eventually reach their limits. Mortgage payments come due. Insurance companies demand their premiums regardless of whether wages have increased. The government can point to rising nominal GDP, but that statistic does not tell us whether households are actually enjoying a higher standard of living. Inflation itself increases the nominal value of economic activity, creating the appearance of growth even when purchasing power is deteriorating.
What is especially concerning is the collapse in confidence about the future. Consumer expectations influence actual economic behavior. A household that believes its finances will deteriorate is less inclined to purchase a home, replace a vehicle, start a business, or undertake another long-term financial commitment. Businesses respond to weakening demand by reducing investment, postponing expansion, and eventually cutting employment. This is how declining confidence can become a self-reinforcing economic contraction. The public’s expectations matter because the economy ultimately depends upon millions of individual decisions about spending, saving, borrowing, and investing.
Gallup’s April survey found that a record 55% of Americans believed their financial situation was getting worse. Inflation and high prices remained the leading financial concern, while 62% worried about having sufficient money for retirement and 60% feared being unable to cover major medical expenses. These concerns extend far beyond a temporary increase in gasoline prices or a disappointing employment report. Americans are questioning whether they will be able to maintain their standard of living throughout their working lives and into retirement. That represents a much deeper deterioration in economic confidence.
The political establishment continues treating the economy as a collection of statistics that can be manipulated through monetary policy and government spending. But the consumer measures prosperity through purchasing power, financial security, and the ability to plan for the future. An economy in which asset owners accumulate wealth while working families struggle to afford basic necessities will eventually experience a profound loss of confidence in its institutions. This is not simply a question of which political party controls Washington. Both parties have participated in the expansion of government debt, spending, and policies that have contributed to monetary instability.
The American consumer is sending a warning that should not be ignored. When 41% expect their finances to deteriorate over the coming year, exceeding even the pessimism recorded during the 2008 Financial Crisis, something fundamental has changed. The public no longer believes that tomorrow will necessarily be better than today. That loss of confidence is far more significant than another monthly adjustment to the inflation rate or another optimistic government press release. You cannot restore prosperity through statistics while the purchasing power of the people continues to decline. Eventually, economic reality catches up with political promises, and the people who have been paying the bill demand to know where their future went.
